Swiss Franc Up After SNB, Dollar Repricing Extends
The Swiss franc outperformed its major peers after the Swiss National Bank policy decision while options sentiment for the dollar further improved.
EUR/CHF drops as much as 0.4% to 0.9364 and remains rather directionless as it keeps orbiting its 21-DMA since late April.
SNB cut its interest rate to zero as widely expected; President Martin Schlegel said that officials remain willing to be active in the foreign exchange market as necessary and they are also aware that “negative interest rates do have undesirable side-effects and presents challenges for many economic agents”.
The Bloomberg Dollar Spot Index pared a 0.2% advance yet was still headed for a fifth day of gains, as Bloomberg cited people familiar as saying a US strike on Iran may take place this weekend, although the situation is still evolving.
One-week risk reversals are now the most dollar-bullish since early March, suggesting an aggressive shift in sentiment.
Cash trading in US stocks and Treasuries is closed for the Juneteenth holiday.
EUR/USD drops 0.3% to 1.1446 before erasing losses; an extended flare-up of the crisis in the Middle East could cause a stagflationary shock in the euro area, ECB Governing Council member Olli Rehn said.
EUR/NOK rallies as much as 1.3% to 11.5994, its highest since May 30, after Norges Bank surprised with its first post-pandemic reduction of borrowing costs and said more cuts are on the cards for this year; the bullish momentum faded and the pair trades around 0.4% higher on the day.
The Antipodean currencies lead G-10 losses; AUD/USD drops 0.8% to 0.6460, NZD/USD down 1.1% to a more than two-week low at 0.5964.
USD/JPY reverses losses to climb 0.1% to 145.29; Japan’s auction of five-year government notes met the strongest demand in almost two years on receding expectations for a rate hike by the nation’s central bank.
GBP/USD modestly higher at 1.3429 ahead of the BOE decision.
Source : Bloomberg
