Thursday, 10 Feb 2011

Dollar Rises, Swiss Franc Tumbles

The dollar gained broadly today as the greenback was supported by US jobless claims that fell to their lowest levels since 2008.

Supporting the dollar today was the release of better than expected weekly jobless claims. The report showed only 38K new jobless claims were applied for last week. Economists expected 411K new jobless claims.

The euro was not without its own troubles as spreads on Portuguese debt widened versus its German counterparts. The rise in spreads may have been caused by renewed fiscal worries in the euro zone. Reports the ECB was purchasing Portuguese sovereign debt were published by Dow Jones and the Financial Times.

The Swiss franc was sold across the board following less than expected CPI. Inflationary data from Switzerland showed CPI fell by 0.4%. Expectations were for a decline of 0.1%. This may give the SNB an opportunity to hold rates steady at 0.25% when the bank next meets in March.

At the end of the New York trading session, the EUR/USD was down at 1.3600 from an opening day price of 1.3701. The USD/JPY was up sharply at 83.30 after opening the day at 82.50. The EUR/CHF was at its highest level since November at 1.3190 from 1.3141.

Tomorrow traders will focus on British PPI data which comes on the heels of the BOE decision to hold interest rates steady in-light of rising inflationary pressures. Also to be released are US trade balance numbers and US consumer sentiment data.

For the EUR/USD, support comes in at the rising trend line from the January low. Tomorrow this support falls at 1.3610. Further support is found at last week's low of 1.3500. Resistance is located at 1.3740 and 1.3860.