Much pondering was going on at the end of last week when the Swiss lowered their interest rates by a full percentage point, which came as a surprise to the markets. The euro jumped against the Swiss franc. Rumors about too much lending by Swiss banks to Eastern European countries circulated, followed by whispering about more of the country’s banks being in trouble than was anticipated. Whether these notions are of substance or not, in relation to the rate cut they are far off the mark. The real issue is exports from Switzerland to Europe, which account for a vital 80% of the country`s foreign demand. Ever since the euro’s introduction, the Swiss National Bank has been very keen on aligning the CHF to the EUR, therefore keeping interest rates as low as possible relative to euro rates, to avoid too much demand for the currency of a very small, yet considered safe, country with an open economy. So the Swiss were early, ahead of a further expected substantial reduction of EUR interest rates, to occur most probably in December. The latter nourishes the bull case for the dollar, where expectations call for an earlier return of the U.S. economy to growth than they do for Europe.
The USD is still moving in trading ranges versus many pairs, right now in a slight upmove this European morning, as a reaction to a weak start of the week in Asian trading. We see this upmove ending soon today, from where we expect another weak performance for the USD. See the projected trading ranges in the major pairs below. Another ugly figure was out this morning for the IFO Index in Germany - expect today’s U.S. sales of existing homes to be depressed as well (16:00 CET).
By George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The pair seems to be continuing its strength today, although a downward correction set in in European morning trading. Currently priced at 1.2625, we expect the 1.2670 first resistance to be tested and eventually broken on the upside, leading to the 1.2730 level.
GBP / USD
Cable is about to attack its nearby resistance at 1.5000 in European morning trading and is currently at 1.4945 in an upside move. We do not expect this resistance at 1.5000 to be broken significantly on the upside and see rather a sideways move between that level and 1.4900 on the downside.
USD / CHF
The dollar traded back in Asian hours, and recovered only slightly in European morning trading. Currently priced at 1.2195 against the Swiss franc, we do not see much of an upside move today and expect the downside strong support at 1.2130 to be tested later in the day.
USD / JPY
In an unbroken upmove in all of Asian and early European trading, the dollar is currently priced at 95.35. Most probably testing upside resistance at 95.80 soon, we expect downmoves from that level and eventually testing of the the 94.50 downside support level.
The USD is still moving in trading ranges versus many pairs, right now in a slight upmove this European morning, as a reaction to a weak start of the week in Asian trading. We see this upmove ending soon today, from where we expect another weak performance for the USD. See the projected trading ranges in the major pairs below. Another ugly figure was out this morning for the IFO Index in Germany - expect today’s U.S. sales of existing homes to be depressed as well (16:00 CET).
By George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The pair seems to be continuing its strength today, although a downward correction set in in European morning trading. Currently priced at 1.2625, we expect the 1.2670 first resistance to be tested and eventually broken on the upside, leading to the 1.2730 level.
GBP / USD
Cable is about to attack its nearby resistance at 1.5000 in European morning trading and is currently at 1.4945 in an upside move. We do not expect this resistance at 1.5000 to be broken significantly on the upside and see rather a sideways move between that level and 1.4900 on the downside.
USD / CHF
The dollar traded back in Asian hours, and recovered only slightly in European morning trading. Currently priced at 1.2195 against the Swiss franc, we do not see much of an upside move today and expect the downside strong support at 1.2130 to be tested later in the day.
USD / JPY
In an unbroken upmove in all of Asian and early European trading, the dollar is currently priced at 95.35. Most probably testing upside resistance at 95.80 soon, we expect downmoves from that level and eventually testing of the the 94.50 downside support level.
