News Column

Swiss Franc Climbs Amid Risk Aversion

August 1, 2014

BRUSSELS (Alliance News) - The Swiss franc advanced against the other major currencies on Friday's European session, as European stocks slipped on caution ahead of US jobs data for July, due today.

Economists expect an addition of 230,000 jobs in July, after an increase of 288,000 jobs last month. Unemployment rate is seen unchanged at 6.1%.

Traders are pricing in the probability of US interest rate hike faster-than-forecast, in the light of strong US economic data this week.

Weak PMIs out of the euro area, along with unimpressive corporate news also contributed to sell-off in the session.

The Swiss franc rose to 1.5278 against the pound, its strongest since July 16, from an early low of 1.5353. The franc may likely find resistance around the 1.52 zone.

U.K 's manufacturing activity expanded at a slower than expected rate in July as growth in output and new orders slowed, the results of a survey by Markit Economics and the Chartered Institute of Purchasing and Logistics showed.

The Makit/CIPS manufacturing purchasing managers' index, or PMI, decreased to 55.4 in July from 57.2 in June, but remained above the survey average of 51.5.

Reversing from an early low of 113.05 against the yen, the franc spiked up to over a 2-week high of 113.36. At Thursday's close, the pair was worth 113.20. The franc is likely to challenge resistance around the 114.00 mark.

Positive turnaround in the three areas of financial conditions, expectations and economic activity brought about by the introduction of quantitative and qualitative easing has positioned the Japanese economy on track to achieve the 2% price stability target, as expected, Bank of Japan Governor Haruhiko Kuroda said in his speech today.

Having fallen to 0.9096 against the greenback at 3:55 am ET, the franc rose to 0.9074 during European deals. The franc is poised to challenge resistance around the 0.90 mark.

The Swiss franc recovered slightly to 1.2160 against the euro, from a low of 1.2170 hit at 3:00 am ET. The franc is likely to face resistance around the 1.21 region.

Eurozone manufacturing activity growth remained stable at June's seven-month low, final data from Markit Economics showed.

The final seasonally adjusted manufacturing Purchasing Managers' Index came in at 51.8 in July, unchanged from June. The flash score for July was 51.9.

Looking ahead, US personal income and spending data and construction spending - all for June, along with jobs data, Reuters/University of Michigan's final consumer sentiment index and ISM manufacturing for July are likely to influence trading in the New York session.

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Source: Alliance News

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