Euro-Zone Campaign : October 12 2009
October 12th, 2009 Posted in Daily Forex News, Euro-Zone
The EUR vs. Majors:
The EUR made a steady rise during last week against its major counterparts. It climbed up to 1.4764, against the U.S dollar easily breaking the minor resistance line of 1.4720 from last week. However the currency then slipped back down before climbing as high as 1.4817. On Monday the EUR/USD inched up to $1.4762, after weakening as much as 0.4% to $1.4677 the previous week. The market is still quite bullish on the EUR/USD cross, which enjoys a solid recovery. Another week of range trading is quite possible before making another move up, to $1.4820.
The European currency also rose to a 2 week high vs. the Japanese yen before a report today forecast to show German investor confidence climbed to the highest level in 3 1/2 years, boosting demand for higher-yielding assets. The EUR advanced to 132.37 yen from 132.18 yen late on Friday. The EUR/JPY also strengthened on President Trichet’s comments. He was quoted saying that the 16-nation Euro-region’s economy begins to show signs of stabilization.
The EUR advanced against the Sterling, as much as 0.4% to 93.36 pence, its highest level in more than 6 months. The EUR gained after the Center for Economics and Business Research said U.K. Interest Rates will stay at a record low until at least 2011, thus implying that growth is going to be fairly weak in the U.K as opposed to the Euro-Zone economy.
A surprise rate hike by Australia last week put renewed market focus on the direction of Interest Rates, and as investors are likely to continue selling the UK currency on the view that British Interest Rates will remain low for an extended period, the EUR/GBP may advance further.
The CHF vs. Majors:
The Swiss Franc has been one of the currencies that most enjoyed the U.S dollar’s big fall last week. The CHF was up sharply against the U.S dollar last week as the greenback weakened on improved investor sentiment after aluminium company Alcoa Inc. (AA.N) reported a surprise profit late on Wednesday.
The Swiss Franc also gained vs. the EUR despite speculations that the Swiss National Bank (SNB) may intervenes to weaken the Swiss currency. The SNB do not hesitate to intervene in the markets to weaken their local currency. While this move has proven to be short lived, they still do it. Such intervention may send EUR/CHF jumping upwards unexpectedly. Afterwards, the move cannot hold for a long time – making such an intervention an opportunity for FX traders to enter the market.
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Tags: Dollar bearishness, European Single Currency, Swiss Franc
