Forex – USD/CHF increases as markets digest SNB surprise report
The U.S. dollar increased against the Swiss franc on Friday, easing off the earlier session’s three-and-a-half year lows as markets absorbed the Swiss National Bank’s surprise financial policy reports made that day.
USD/CHF reaches 0.8807 during European afternoon trade, the session high; the pair then consolidated at 0.8705, rallying 3.50%.
The pair was probable to find support at 0.7360, Thursday’s low and resistance at 1.0221, Thursday’s high.
The dollar jumped over 11% against the Swissie on Thursday after the SNB surprised markets on Thursday by scrapping the 1.20 per euro exchange rate floor it imposed in September 2011, in a offer to stave off deflation and stop the continued appreciation of the safe-haven franc.
The central bank also decrease rates to minus 0.75%, from minus 0.25% and lowered its target position for the three-month Libor to minus 1.25% to minus 0.25%, from minus 0.75% to 0.25%.
The move signified that the SNB sees a high possibility that the European Central Bank will apply quantitative easing measures at its upcoming meeting next week, sending the euro plunging over 12% against the Swiss franc on Thursday.
EUR/CHF improved on Friday, surging 3.12% to trade at 1.0082.
Before in the day, official data showed that Swiss retail sales dropped at an annualized rate of 1.2% in November, puzzling expectations for a 1.1% rise, after an uptick of 0.3% the previous month.
Market participants turned their consideration to U.S. industrial production and consumer sentiment data due later in the trading session for further signs on the strength of the country’s economic recovery after a string of varied news were released on Thursday.