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USD/CHF: Franc continues to be in demand _23/06/2016

Technical analysis and trading recommendations -

The unpredictability of the outcome of the referendum is pushing many investors to withdraw funds to safe-haven assets such as the yen, gold and the franc, despite the fact that the franc lost some of its role as a safe-haven.

The main fundamental driver is still the referendum on the financial market.

However, significant strengthening of the franc can not but worry the leaders of the Swiss National Bank, which is already almost traditionally considered overvalued franc.

With the opening of today's trading day the franc continues to strengthen, including in the pair USD / CHF.

If the outcome of the referendum in favor of the country's exit from the EU on the financial markets followed by a powerful redistribution of funds, primarily in asset-seekers, such as gold, yen, franc.

When a substantial inflow of capital into Switzerland, the central bank of the country, to stabilize the franc and keep him from excessive strengthening may, in addition to foreign exchange intervention will have to lower the deposit rate from the current 0.75%.

At that time, all the attention of market participants focused on the referendum in the UK, emerging macroeconomic indicators in other countries remain undetected.
Thus, according to released data earlier in the week, Switzerland's trade balance improved significantly in May, despite the strengthening of the franc.

For example, exports from Switzerland in May amounted to 17.252 billion francs, representing growth of 1.4% in annual terms. Foreign trade surplus in Switzerland in May of 3.786 billion francs (vs. 2.880 billion and 2.508 billion in April).

The index of economic expectations in Switzerland, the ZEW, according to data presented yesterday, was up 1.9 points to 19.4 in June. At the same time, many economists believe that Swiss GDP growth over the next three to five years will be no more than 1% -1.5%.

The pair USD / CHF continues to decline, despite the fact that during his two-day performance at this week Fed Janet Yellen head actually confirmed the policy of raising interest rates in the United States.

As stated D.Yellen, the real inflation in the US is growing, despite the expectations of its decline, the US economy is in good shape and will continue to grow.
After the results of the referendum will be known in the UK, and financial markets stabilize, investors' attention will switch again to the possibility of raising interest rates in the United States, as stated recently D.Yellen, and it will strengthen the position of the dollar in the foreign exchange market.

Thursday, 23 Jun, 2016 / 11:18

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