Swiss KOF indicator falls, Iranian nuclear deal eyed

Forex News and Events

Swiss KOF indicator reached 3-year low (by Arnaud Masset)

After a slight uptick in May, KOF leading indicator dropped to 89.66 in June, its lowest level since December 2011. The highly resilient Swiss economy is clearly feeling the consequences of a strong Swiss franc and the economic outlook does not look great. In addition, the Greek situation is also weighing on the Swiss franc as investors shun risk and flee to safe-havens. Yesterday in Bern, the SNB declared that it had intervene in the currency market on Sunday night to stabilise the Swiss franc amid Greek deadlock. Thomas Jordan refused to give details about the scale of the intervention but we believe it wasn’t a massive intervention as the SNB has remained moderately active in the FX market lately. Indeed, sight deposits increased by a weekly average of CHF634mn during the month of June, compared to CHF1,368mn in May and CHF882mn in April. Despite the SNB’s willingness to reduce traders’ interest for Swiss franc by intervening in the foreign exchange market, the CHF will remain in demand as long as the long-term situation do not improve substantially in Eurozone and we are not talking only about the Greek situation. We expect EUR/CHF to trade sideways and to remain within the 1.0250-1.05 range.

U.S. put Iran under pressure (by Yann Quelenn)

In Vienna negotiations are taking place between Iran and the United States over a nuclear deal.
International inspections of Iranian military facilities represent a major issue. John Kerry, U.S. Secretary of State, is looking for completing an agreement that would restrict Iran Nuclear Activity. The United States is growing impatient that Iran justifies that its nuclear program is only intended for peaceful purposes.

Thus, Iran must provide guarantees and economic sanctions will be lowered and even removed.
However, it may take up to ten years for international inspectors to make sure that Iran comply with their pledge. Therefore, Iran is putting all its effort in reducing this timeframe. In addition Israel adds up even more pressure stating that a nuclear deal would be irrelevant. In other words Iran would still be a threat.

Earlier this month, following the OPEC meeting, Iran has reiterated that despite falling prices it will sell more crude oil in case the sanctions are lifted. As a result, oil price has been pushed downside and we target the Brent to reach $63 a barrel on the medium-term.

USDJPY - Bearish Momentum Is Increasing