Swiss Franc Shocker May Make for Muted End to Trading Week

Swiss Franc Shocker May Make for Muted End to Trading Week

A nervous quiet may settle over markets in the final hours of the trading week as investors digest the SNB’s shockingly surprising removal of the Swiss Franc cap.

Talking Points:

  • FX Markets Set for Quiet Week-End as Traders Digest SNB’s Franc Shocker
  • US Dollar Unlikely to Face Pronounced Selling Pressure on Soft CPI Result
  • See Economic Releases Directly on Your Charts with the DailyFX News App

A lackluster economic calendar in European trading hours is likely to fade from focus as battered traders digest the brutal volatility of the past 24 hours. The markets were understandably rattled after the Swiss National Bank unexpectedly scrapped its three-year-old Swiss Franc cap of 1.20 against the Euro, saying the “exceptional and temporary measure…is no longer justified.” EURCHF 24-hour realized volatility jumped to the highest level since at least 1971, swelling to nearly five times its previous peak (recorded in March 1995).

The announcement caught the collective FX space by surprise. IMF Managing Director Christine Lagarde seemed to deliver the understatement of the day, quipping in an interview with CNBC that she found it “a bit surprising” that SNB President Thomas Jordan did not inform her of the impending move and adding that “talking about it would be good.” Lagarde also held up the Federal Reserve under the stewardship of Janet Yellen as a positive contrast with the SNB’s approach, saying the US central bank chief is “communicating very clearly”.

On balance, the Franc cap disappeared almost as suddenly as it emerged in September 2011. Then too, the SNB acted without warning and sent markets scrambling before the dust eventually settled. Measuring the cumulative fallout from the Swiss unit’s surge may prove to be a protracted affair, with the full breadth of the various ripple effects likely to emerge over weeks and months rather than hours and days.

In the meantime, shell-shocked investors are unlikely to be willing to commit to a strong directional bias. This will probably make for a nervously quiet end to the trading week. December’s US CPI report amounts to the most significant bit of noteworthy event risk. The headline year-on-year wholesale inflation rate is seen edging down to 0.7 percent, the lowest since October 2009. The soft result may not yield significant downside pressure on the US Dollar however.

The core CPI reading (which excludes the impact of energy prices) is seen registering at 1.7 percent, unchanged from November. This suggests the Federal Reserve may continue chalking up weak headline inflation to the transitory impact of dropping crude oil prices, meaning it won’t necessarily interpret the weak headline number as reason enough to delay interest rate hikes. Needless to say, an upside surprise on the core reading akin to yesterday’s PPI print would only reinforce this narrative.

Critical Levels
CCY Supp 3 Supp 2 Supp 1 Pivot Point Res 1 Res 2 Res 3
EURUSD 1.1215 1.1440 1.1536 1.1665 1.1761 1.1890 1.2115
GBPUSD 1.4966 1.5083 1.5133 1.5200 1.5250 1.5317 1.5434

25 Comments

  1. I was curious if you ever thought of changing the layout
    of your website? Its very well written; I love what youve got to say.
    But maybe you could a little more in the way of content so
    people could connect with it better. Youve got an awful lot of text for
    only having 1 or 2 pictures. Maybe you could space it out better?

  2. Useful information. Lucky me I discovered your site unintentionally, and I’m surprised why this accident didn’t
    happened in advance! I bookmarked it.

  3. Excellent beat ! I wish to apprentice whilst you amend your
    site, how can i subscribe for a weblog website? The account aided me a appropriate deal.

    I have been tiny bit acquainted of this your broadcast provided vivid clear idea

  4. I pay a quick visit every day a few sites and blogs to read posts, except this weblog presents feature based
    writing.

  5. No matter if some one searches for his required thing, therefore he/she wishes to be available that in detail, therefore that thing is maintained over here.

  6. Howdy! I could have sworn I’ve been to your blog before but after
    looking at many of the posts I realized it’s new to me.
    Nonetheless, I’m definitely delighted I discovered it and I’ll be
    book-marking it and checking back frequently!

  7. I am sure this piece of writing has touched all the internet people, its really really fastidious piece of writing on building up new website.

  8. Hi! I could have sworn I’ve visited this site before but after looking at a few of the articles I realized it’s new to me.
    Nonetheless, I’m definitely delighted I found it
    and I’ll be bookmarking it and checking back frequently!

  9. excellent issues altogether, you simply received a brand new
    reader. What would you suggest about your post that you
    simply made some days in the past? Any sure?

  10. Every weekend i used to go to see this web site, for the reason that i wish for enjoyment,
    as this this website conations really good funny stuff
    too.

  11. 391738 472091A blog like yours ought to be earning a lot cash from adsense..-., 77855

  12. 498905 719141Ill do this if need to as a lot as I hope that is not too far off the track. 13410

  13. 534294 978769I wish I had a dime for every bad post Ive read lately. I also wish other writers had your talent and style. Thank you. 790274

  14. 468665 467227Bereken zelf uw hypotheek. Hypotheek berekenen? Maak snel een indicatieve berekening van het maximale leenbedrag van uw hypotheek. 769848

  15. We stumbled over here coming from a different page and thought
    I might as well check things out. I like what I see so now i’m following you.

    Look forward to looking over your web page repeatedly.

  16. 784865 295166When I came over to this post I can only look at part of it, is this my net browser or the internet website? Really should I reboot? 755826

  17. Very shortly this website will be famous amid all blogging viewers, due
    to it’s good content

  18. 173259 129932I appreciate your work , thanks for all the informative weblog posts. 267133

  19. 839298 207530Nothing far better than Bing discovering us a excellent internet site related to what I was looking for. 544582

  20. 787588 280208Hey! Very good stuff, do tell us when you lastly post something like this! 553446

  21. generic stromectol online – ivermectin cost australia ivermectin 0.1 uk

  22. ivermectin buy online – ivermectin tablet price stromectol 15 mg

  23. ivermectin brand name – ivermecpills.com ivermectin lice

  24. clopidogrel 75 mg – plavix for sale online clopidogrel tab 75mg price

  25. eu pill for ed – erectile dysfunction treatment london can you buy ed pills over the counter

Leave a Comment

Your email address will not be published. Required fields are marked *