Fall in Swiss Retail Trade and Trichet’s appreciation for a strong dollar put pressure on the Euro and Franc

[RTFX-Trading]

 

What's new:

Switzerland: February Retail Sales, -3.8%, previous +1.20%.
Euro-zone: Trade Balance (Euros), -2.0B, exp -4.9B.

ECB: Jean-Claude Trichet declares, “Will announce unconventional measures early May”

Today:
16h00 United States: University of Michigan Confidence index, exp 58.5, previous 57.3.
18h30 United States: Fed President Bernanke speaks.


European Session Rates:

EURUSD: 1.3121 - 1.3036
USDCHF: 1.1679 - 1.1535
GBPUSD: 1.4867 - 1.4756
EURCHF: 1.5155 - 1.5238
USDJPY: 99.63 – 99.13
Gold: $ 870.25

Comments:

The  European Central Bank President, Jean-Claude Trichet giving a speech in Tokyo, expressed appreciation for the comments of U.S. officials that a strong dollar is in the interest of the United States. When the euro was launched, it moved to 1.17 against the dollar, it is now close to 1.3000 dollars. Mr. Trichet said that it is not fair to say that the euro is weak in the current situation. He added that the year 2009 would be difficult and it was not until 2010 that we can expect a recovery. He went on to say that the ECB should balance its policy between the need of immediate action to address the crisis and plans for long-term output. On the long-awaited unconventional measures, the ECB President said that he would announce details in early May. These measures should actively involve banks, without giving details.

 

The turnover of retail sales in Switzerland are down 3.8% in February over one year, after an increase of 1.20% in January. Initially there was little reaction to this figure, however soon after the Swiss franc lost ground across the board. The USDCHF and GBPCHF reached monthly highs at 1.1679 and 1.7306 respectively. While the EURCHF rose to 1.5238. The Swiss franc also made a new monthly low against the Yen at 85.02.

Investors have sold the euro following Trichet’s speech, the EURUSD fell to 1.3036 this afternoon at 13h25 CET, very close to our target of 1.3051 (refer to RTFX TraderTip). Overall, my feeling is bullish dollar, however, as orders are present at 1.3020-50 and our system of technical analysis has detected a "Low Zone", I would not be surprised to see an increase of the EURUSD from here, a break of 1.2980 would challenge this view.

 

Later today, we should look out for the Univ. of Michigan index scheduled at 16h00 CET and, the U.S. Federal Reserve President Ben Bernanke is due to speak at 18h30 CET.

 

Good Afternoon

Emman Xuereb

 

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