MORNING BRIEFING: SNB monitors the evolution of the EURCHF currency pair.

[RTFX-Trading]

MORNING BRIEFING: SNB monitors the evolution of the EURCHF currency pair.

What’s new:
United Kingdom: Kept interest rates and asset purchases unchanged.
United States: Trade deficit widens in July
United States: Weekly jobless claims decline to 550'000.
United States: Recession is over, but the employment crisis will last.
United States: Lockhart (FED) believes that the 1st phase of the recovery is underway.
Euro zone: The economy has hit a low point says Liikanen (ECB).
France: Trade deficit reduced to €1.29B in July.
France: Industrial production is up slightly in July.

Today:


Overnight Rates and Indices:
EURUSD: 1.4627 – 1.4571.
USDCHF: 1.0391 – 1.0349.
GBPUSD: 1.6742 – 1.6644.
EURJPY: 133.83 – 133.09.
USDJPY: 91.80 – 91.00.
DowJones: 9'627 +0.84%.
NASDAQ: 2’084 +1.15%.
S&P 500: 1’044 +1.04%.
Nikkei: 10’427 -0.82%.
Shanghai: 2’973 +1,67%,
Gold: $1’001.25.
Crude Oil: $72.29.
 
Comments:

The Bank of England kept its key rate to its historic low of 0.50% and its repurchase of financial assets unchanged. This status quo has reassured the markets, causing a sharp appreciation of the Sterling Pound, as some economists expected the BoE to increase its "quantitative easing” program to £200B. The minutes of this meeting which will be released next Thursday will be very interesting; the monetary policy committee could have been split again on this subject.

Across the Atlantic, the Atlanta Federal Reserve Chairman, Dennis Lockhart, is optimistic about the economic outlook for the United States: he said that "overall, the US economic situation has improved but still the economy is fragile '. Timothy Geithner, U.S. Treasury Secretary, said that the gradual recovery of the economy would allow the state to terminate certain support schemes implemented since the beginning of the crisis in favor of the market. However, Geithner acknowledged that many issues remained unresolved, as the unemployment rate which he described as "unacceptable", the fragility of the mortgage market, tensions on the commercial real estate loans and issues about credit to SMEs. Donald Kohn, vice chairman of the Fed, said that the US central bank was preparing to break gradually its ultra-accommodative policy, but that transition will not begin before a "prolonged period". These comments show that the US will take a break from their economic stimulus programs.

Regarding the Swiss Franc, panic spread on the foreign exchange market at 15:25 yesterday afternoon, as the USDCHF rose from 1.0392 to 1.0465 and EURCHF from 1.5144 to 1.5200 for a few minutes on rumors of an intervention by the Swiss National Bank. According to my information, the SNB has only asked for quotes on the pair EURCHF, this in order to inform us that it is monitoring closely.

Good week end.

Emman Xuereb
RTFX Ltd
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