IST: Swiss Franc Turns Bullish As Investors Look For Safe Havens
The combination of Middle East tensions, renewed euro zone debt concerns and a poor US Unemployment Claims figure have led to substantial gains for the Swiss franc over the last 24 hours. It appears that the safe haven CHF will likely remain bullish as long as these three factors continue to dominate the headlines.
Economic News
USD - Dollar Likely to Remain Bearish to Close Out the Week
The US dollar tumbled against virtually all of its main currency rivals yesterday and in the overnight session, following the release of a disappointing Unemployment Claims figure. Losses were particularly sharp against the Swiss franc, which has recently gained traction as investors search for safe haven assets. Currently the USD/CHF is trading around the 0.9500 level, down over 100 pips in the last 24 hours.
Against the euro, the greenback lost around 70 pips yesterday before staging a minor correction during Asian trading. Currently the pair is hovering just below the 1.3600 level.
As we close out the week today, traders will want to pay attention to economic news out of the UK to judge where the USD will be heading. The UK Retail Sales figure is expected to come in at 0.6% which, if true, would signal a substantial increase over last month. Sterling has recently turned bullish against the dollar and if today's indicator comes in as predicted, it will likely extend that trend.
In addition, traders will want to focus on a speech expected from the Fed Chairman, set to occur at 13:00 GMT. Should Bernanke decide to comment on yesterday's unemployment figure, investors are likely to continue shifting their assets to the USD's main currency rivals. The dollar is therefore unlikely to reverse its losses before markets close for the weekend.
EUR - Debt Concerns Continue to Weigh Down on the Euro
While the euro was able to make moderate gains against the US dollar yesterday, the currency was virtually flat against the Japanese yen and British pound. Furthermore, against the Swiss franc the EUR saw a steep decline throughout the day.
Analysts attributed the euro's sluggish behavior to a combination of global events that are keeping investors away from riskier assets. Chief among these events is the prolonged doubt the euro zone will be able to effectively tackle its sovereign debt woes.
Today, a lack of significant news from the euro zone is unlikely to help draw investors back to the troubled currency. Still, traders will want to pay particular attention to the speech from the US Federal Reserve Board Chairman, Ben Bernanke. If he sounds a pessimistic note with regards to the US economic recovery, the dollar is likely to drop in value.
