Tuesday, 31 Aug 2010

Swiss Franc Shines in Today's FX Trading

The dollar was down versus the yen, euro and the Swiss franc today but rose against British Pound in volatile trading to end the month of August. Equities traded in a large range as the Dow Jones Industrials Average looks to end the worst August since 2001.

The EUR/USD traded higher at 1.2680, after an opening day price of 1.2650. The USD/JPY was lower at 84.07, from 84.36. The big mover of the day was the Swiss franc. The USD/CHF fell to 1.0147, after opening the day at 1.0233.

Release of the Federal Reserve's meeting minutes did not offer any surprises as the data showed the Fed's decision not to begin shrinking the size of the Fed's balance sheet that contains billions of government bonds and mortgage backed securities.

The German employment picture sparked the euro as the German Unemployment Change posted job losses of only 17K. Economists had forecasted job losses of 19K.

Traders continue to test the resolve of the Bank of Japan and the Swiss National Bank to intervene in the currency markets to halt the appreciation of their respective currencies. Investors should continue to bid both the yen and franc higher until intervention is undertaken by the central banks.

Tomorrow traders will be following the ADP Non-Farm Employment Change. This data release typically serves as a preview of the Labor Department's Friday jobs report. Also on the economic calendar is the release of the weekly crude oil inventory reports.