This week had everything, good and bad news. Let’s finish with a good one: “The economic situation seems to be better than what people had expected at the beginning of the year.”
Market review
The Swiss leading indicators dropped to a record low as manufacturing shrank at the fastest pace since 1995, while unemployment rate climbed to the highest level in more than two years. Additionally, on Thursday the Swiss central bank cut its target lending rate to 0.25 % and said it would also buy foreign currencies. The decision shocked the market and made the SNB the first major central bank to raise the issue of buying corporate bonds as foreign currencies as a way to fight against deflation. This news put the CHF under pressure and he crashed 3.14 % against the EUR, the biggest daily drawdown since the 16-nation currency’s 1999 debut. Also the USD/CHF increased 2.69 % and the GBP/CHF could even rose 3.36 %.
Today the JPY trades near a two-month low against the EUR as a global rally in stocks reduced demand for the Japanese currency. A smaller than expected decline in US retail sales and hopes that the largest US bank will survive without a government takeover, supported the global stock market. Citigroup Inc. reported it does not need any more emergency cash from Washington, while the Bank of America told it was profitable this year. The AUD and NZD were able to take advantage of the stock and commodity gains and reached a one-month high against the USD. Also the EUR/USD headed for its biggest weekly gain this year after European Central Bank official said he doesn’t see deflation risk in the European Union. This statement tempered speculations policy makers will cut interest rates.
USD/CHF
On a long term view, the USD/CHF trades in an upward trend. After reaching a low point in 2009, the pair rebounded and is now trading along the middle Pitchfork. The last increase resulted in a anew touch of the trend line. But it wasn’t strong enough to break through. However, the Commodity Channel Index (CCI) crossed the 100 level and reached a high at 210. This both developments could be a sign of a counter movement on a short term view.
CAD/JPY
Since the end of March, the CAD/JPY has been trading in a downward trend channel. Yesterday it touched a trend line along the low marks. The CAD rebounded from this support line and is now trading in the near of the upper level of the trend duct. Simultaneous, the MACD seems to cross the signal line from the bottom. This might indicate a long impulse and we have to take attention if the pair brakes out of the bearish trend..
