The Swiss Franc continued to gain on the Euro in Wednesday’s trading, extending a week of very strong gains already.
The EUR/CHF pair, which has been sticking to very tight trading ranges recently has seen a sharp increase in volatility once it managed to break below the 1.46 level and in the wake of the Swiss National Bank interest rate meeting.
SNB Upgrades Outlook And Says Will Act to Prevent Appreciation of Franc
Last Thursday, the Swiss National Bank concluded its meeting where it maintained the 3-month Libor target rate at 0.25%, as forecast. The SNB said that it would be maintaining its expansionary monetary policy, upgraded its forecasts for growth and inflation, but reiterated that “it will act decisively to prevent an excessive appreciation of the Swiss franc against the euro.”
Official Release Provided by: Swiss National Bank (PDF)
That’s interesting considering the large gains we have seen by the Swiss Franc in the prevailing sessions. Does this mean the SNB has given up on defending the appreciation of the Franc? Time will tell. But for now, traders have called the central bank’s bluff and are searching for a “true value” for the currency pair.
In this look at the past month and a half of trading using 4-hour candles, we can see the previous major intervention by the SNB was back on Feb. 5th when the pair broke below the 1.4650 level. There was a strong intervention, that brought the pair from its low near 1.4550 to 1.4845. Those gains however were cut down rather swiftly and the pair had settled into a very tight range since then as it pushed below the 1.4650 level in a gradual fashion. Now we have seen a decisive move below our previous low near 1.4560 and the SNB seems nowhere to be found.
In this chart using daily candlesticks and looking at the past 5 months of price action, we see more context for the recent decline, and puts our earlier SNB intervention into more focus. Since late December the Euro has been sliding sharply as a result of the sovereign debt issues in Greece. That has caused the pair to slide from around 1.51 in mid December to below 1.45 in today’s session.
Now we take a multi-year view, where we see that we are currently approaching our lows from the fallout of the financial crisis of 2008. The current price is also the bottom of a consolidation that lasted for all of 2002. So there are some strong long-term support coming up for the pair, and it will be interesting to not when the SNB either intervenes or supply and demand forces find a new low themselves.
Swiss Franc Extends Gains vs. Euro, No SNB Intervention
Fundamental Updates \ Nick Nasad \ 12:12 PM EDT \ March 17th, 2010The Swiss Franc continued to gain on the Euro in Wednesday’s trading, extending a week of very strong gains already.
The EUR/CHF pair, which has been sticking to very tight trading ranges recently has seen a sharp increase in volatility once it managed to break below the 1.46 level and in the wake of the Swiss National Bank interest rate meeting.
SNB Upgrades Outlook And Says Will Act to Prevent Appreciation of Franc
Last Thursday, the Swiss National Bank concluded its meeting where it maintained the 3-month Libor target rate at 0.25%, as forecast. The SNB said that it would be maintaining its expansionary monetary policy, upgraded its forecasts for growth and inflation, but reiterated that “it will act decisively to prevent an excessive appreciation of the Swiss franc against the euro.”
Official Release Provided by: Swiss National Bank (PDF)
That’s interesting considering the large gains we have seen by the Swiss Franc in the prevailing sessions. Does this mean the SNB has given up on defending the appreciation of the Franc? Time will tell. But for now, traders have called the central bank’s bluff and are searching for a “true value” for the currency pair.
In this look at the past month and a half of trading using 4-hour candles, we can see the previous major intervention by the SNB was back on Feb. 5th when the pair broke below the 1.4650 level. There was a strong intervention, that brought the pair from its low near 1.4550 to 1.4845. Those gains however were cut down rather swiftly and the pair had settled into a very tight range since then as it pushed below the 1.4650 level in a gradual fashion. Now we have seen a decisive move below our previous low near 1.4560 and the SNB seems nowhere to be found.
In this chart using daily candlesticks and looking at the past 5 months of price action, we see more context for the recent decline, and puts our earlier SNB intervention into more focus. Since late December the Euro has been sliding sharply as a result of the sovereign debt issues in Greece. That has caused the pair to slide from around 1.51 in mid December to below 1.45 in today’s session.
Now we take a multi-year view, where we see that we are currently approaching our lows from the fallout of the financial crisis of 2008. The current price is also the bottom of a consolidation that lasted for all of 2002. So there are some strong long-term support coming up for the pair, and it will be interesting to not when the SNB either intervenes or supply and demand forces find a new low themselves.