Bernanke fails to comfort markets, CHF plummets on SNB rumors

The yen is the top performer an hour into North American trade, advancing more than 0.77% against the greenback. The gains come on the heels of Fed Chairman Ben Bernanke’s speech at the Jackson Hole Economic Policy Symposium where he failed to calm investor concerns about the faltering domestic economy. Markets plummeted after the Chairman omitted the possibility of further quantitative easing measures. In other news, Japanese Prime Minister Naoto Kan resigned overnight after months of criticism over his leadership during the March 11th earthquake and subsequent tsunami that sparked the nation’s deepest postwar economic crisis. The USD/JPY pair broke below the 61.8% Fibonacci extension taken fro0.77m the July 8th and August 4th crests at the 77-figure before encountering interim support at 76.50. The strong rebound here suggests the level is likely to hold with topside targets eyed at back the 77-handle. Subsequent ceilings are eyed at 77.30 and the 50% Fibonacci extension at 77.60. The greenback should remain well supported in light of the fact that the Fed will not be implementing any further dollar diluting policies in an effort to stimulate the ailed economy. Accordingly the pair may continue to trade within its recent range.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

78.62

20-Day SMA

77.08

10-Day SMA

76.78

2011 CAD High

75.93

The Swiss franc is the weakest performer heading into mid-day in New York, with the USD/CHF pair surging more than 1.5% early in the session. The pair saw a breach of the 0.7960 interim resistance level before breaking above the 76.4% Fibonacci retracement taken from the Jul y 19th descent at the 0.80-figure. Topside targets are eyed higher at the 0.8045, the 0.81-handle, and 0.8175. Interim support now rests at 0.7960 backed by 0.7860 and the 61.8% Fibonacci retracement at 0.7820. Accelerating the swissie’s decline are rumors that the Swiss National Bank may begin charging for deposits in an effort stem the currencies rapid appreciation. Coupled with today’s dollar strength, the pair is likely to see further gains as haven flows will favor the reserve currency here.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8060

20-Day SMA

0.7751

10-Day SMA

0.7920

2011 GBP High

0.7078

About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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