In the morning SNB released the Swiss FX reserves for October. The Swiss National Bank’s foreign-currency reserves jumped by 17 billion Swiss francs ($17.04 billion) in the month, putting the central bank on track for another banner quarter after earning a record-high profit of 32.5 billion francs between July and September.
The data increased strongly to $741.5 billion from $724.4billion. Tuesday’s
Contrary to expectations, none of the yesterday’s events, including disclosure of some insights about the new tax reform, created an impulse strong enough to force the pair to make a breakout from the rectangle pattern.
Moreover, expectations of the upcoming release of information about the state of the American labour market led to formation of a minor symmetrical triangle pattern.
The U.S. Dollar has concluded last week a long bottoming process after confirming an interesting reversal pattern. In the chart of the Dollar Index (Figure 1) a so called inverse head-and-shoulders is visible, a technical pattern that anticipates a possible reversal of the negative trend that culminated with the 32 months low of last September at 91. After then, a progression of growing lows has reached, and exceeded last week, the key resistance of the pattern described (94.25).
After making a breakout from the falling wedge formation, the yellow metal was expected to continue the surge at least until the clash with 200-hour SMA. However, a plunge in Euro amid the ECB meeting led to downfall of the exchange rate. As a result, it has finally slipped below the weekly S1 located at the 1,269.58 mark.
The recent appreciation of the Swiss franc has sent shockwaves through Swiss firms, resulting in job losses and lower research budgets. But viewed long-term, Switzerland’s export-driven economy has adapted remarkably well to a strong currency, according to a government report published on Tuesday.
This is the overall conclusion of five studies, commissioned by the State Secretariat for Economic Affairs (Seco), released on Tuesday. They examined the aftermath of the so-called Swiss franc shock, which was triggered when the Swiss National Bank (SNB) ended its longstanding ceiling of CHF1.20 to the euro almost three years ago. That move suddenly made Swiss exports 10% more expensive and cut Swiss economic growth to 0.6% in 2015 from 1.8% a year earlier.
The British Pound had a very challenging trading session yesterday. Due to comments made by the EU Chief Negotiator Michel Barnier about a "deadlock" in Brexit negotiations the Sterling lost 116 basis points against the Greenback just in couple of hours. Despite a release of better than expected US Core PPI data, traders managed to return the pair to the pre-fall 1.3250 level.
In the first half of this trading session the currency rate is expected to test a resistance near the 1.3290 mark. However, whether the cable will manage to soar and bypass the 1.3300 level or fall back to the 200-hour SMA near 1.3192 will depend on release of data about the US CPI and retail sales, which, in turn, will have major implications on decision about the need of another interest rate hike this year.
The Swiss National Bank’s holdings of foreign currency touched a record 724.4 billion francs ($739 billion) in September, an increase of 1 percent from August. The franc slipped against both the euro and the dollar last month, two currencies in which the central bank holds a large portion of its reserves. Still, the franc remains strong, requiring the SNB to stick with its policy of negative rates and occasional interventions, President Thomas Jordan said earlier this week.
Switzerland’s central bank on Monday reported a net profit of 1.2 billion Swiss francs for the first half of 2017 as big foreign exchange losses weighed on earnings from its foreign investments.
The Swiss National Bank made a profit of 100 million francs from its foreign currency positions, as exchange related losses of 11.8 billion francs almost wiped out the earnings from bonds and shares it holds.
The institution’s foreign currency investments have ballooned to 728 billion francs, 12% larger than the entire Swiss economy.
