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Swiss National Bank Release Peg to Euros

A guest post written by DAR Wong

Currency Market Observations – 19 January 2015

Fundamental Outlook

The US retail prices contracts with producers’ cost due to falling crude prices. Consumer prices plunge amid rising consumer sentiment quoted in preliminary report. Japan trade surplus improves in economic outlook. Swiss franc rises after the Swiss National Bank announced the release of peg to Euros, causing unwarranted panic in market for falling against Euros and Dollar.

The US retail sales contracted at minus 0.9 percent in December and lower than expectation. The core prices excluding auto sales also slid to minus 0.1 percent after grew 0.1 percent in November. Producer prices slid to minus 0.3 percent in January. Excluding food and energy, core prices rose 0.3 percent and better than median expectation.

American unemployment claims for the week ended 10 January rose to 316,00 against 297,000 in prior week. Another separate data reported by Federal Bank of Philadelphia says the manufacturing index in January grew 6.3 and way below the previous month 24.5 reading, underscoring a slowdown in economy.

The US consumer prices slid to minus 0.4 percent in December while core prices stagnated at par, both below the median forecast. The University of Michigan reports its preliminary consumer sentiment for January has gained 98.2 and above forecast.

Japan trade surplus rose JPY910 billion in November and better than forecast. Producer prices expanded at 1.9 percent in January from a year ago compared to 2.6 percent in December. Another report on core machinery orders rose 1.3 percent in November and up from prior month at minus 6.4 percent.

Eurostat reports final consumer prices in 18 nation bloc contracted at minus 0.2 percent in December. Core prices, excluding energy and food, grew at par in Eurozone and below 0.1 percent growth in previous month.

On Thursday, Swiss National Bank announced the release of currency cap against Euros that has been pegged at 1.2 since 2011. Swiss franc swelled against USD and Euros and triggered a rapid in Gold prices. Rising Swiss franc has worried business merchants for more costly exports and contraction in tourism to Switzerland.

UK consumer prices rose 0.5 percent in January from a year ago, and down from 1.0 percent gains in previous month. Core prices rose 1.3 percent. Another report by the Conference Board of leading indicators forecasts the growth for coming 6 months projected minus 0.3 percent gains in November.

Technical Forecast

USD/JPY stood well on 116.00 supports last week. The market may recover this week as Dollar strengthens. Technically, we reckon the reversal to 119.20 is possible while the trend threads sideways in firm sentiment. Range is expected to move from above mentioned 116.00 – 119.20 in coming week.

EUR/USD hit 10-year low at 1.1460 last week after Swiss National Bank released cap to Euros. This week, we predict the resistance will emerge at 1.1800 levels in case of short-covering. However, market sentiment is still prone to fall further. Breaking below 1.1500 again might expose the bears to attempt new low at 1.1400 bottoms.

GBP/USD has been threading sideways and begun to consolidate. This week, we reckon the trend will continue to move in uncertainty but range from 1.5000 – 1.5300 regions. Pay attention to the fundamental news from UK bureau as they will lead the direction.

Dar Wong

This post is contributed by OPF Guest Blogger, DAR Wong.

DAR Wong is an approved fund manager in Singapore with 25 years of global trading experiences. You may reach him at dar@pwforex.com

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DISCLAIMER: This post is written for general information only. The author, publisher and/or any third party involved in the distribution of this work assume no legal responsibilities and shall have no liability whatsoever for any direct or consequential losses, costs or expenses arising from the use of the information contained herein.

 






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