Swiss franc falls on SNB Intervention threat

The New Zealand dollar continued to outperform the majors an hour into US trade with the NZD/USD pair higher by more than 0.30%. We noted last week that the kiwi has lagged the high yielders with the pair holding a tight range for much of the week. Dismal employment figures last week weighed on the currency as even as the dollar came under pressure. The pair breached the 23.6% Fibonacci extension taken from the August 31st high and October 27th crests at 0.7975 early in the session as the dollar came under pressure. Interim support rests here with a break below eyeing subsequent support targets at 0.7915, 0.7860, and the 38.2% extension at 0.7815. A sustained move above the 0.80-handle eyes targets at 0.8050, the 0.81-figure, and the 5-week high around the 0.8240. Note that the kiwi remains sensitive to swings in market sentiment with traders continuing to eye developments out of the Euro zone where Greek officials are scrambling to find consensus on a coalition government to pass measures required for the periphery to gain access to the next tranche of bailout funds.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.8200

50-Day SMA

0.8034

20-Day SMA

0.7982

2011 NZD High

0.8842

The Swiss franc is the weakest performing currency at the open with a loss of more than 1.5% against the greenback. CPI data overnight showed inflation in Switzerland contracted by 0.1% in October fueling concerns that the Swiss National Bank may conduct further FX operations to stem the swissie’s rise. In an interview yesterday, SNB President Philipp Hildebrand stated that central bank was “ready to take further measures,” to halt the currencies appreciation with the economy risking a recession should the franc fail to come off. This would be the second intervention from the SNB in nearly two months after effectively pegging the EUR/CHF exchange rate at 1.20 in early September.

The USD/CHF pair briefly broke above the 61.8% Fibonacci extension taken from the October 27th and November 3rd troughs at the 0.90-figure before pulling back to the 50% extension at 0.8955. Interim support holds here with subsequent floors seen at the 38.2% extension at 0.8910 and 0.8850. A breach above topside resistance at the figure eyes topside targets at 0.9030 backed by the 76.4% extension at 0.9055. Look for the swissie to remain under pressure here as concerns over a possible SNB intervention continue to take root. Overnight traders will be eyeing consumer confidence data out of Switzerland with consensus estimates calling for confidence to deteriorate further with a print of -22, down from a previous read of -17 a month earlier.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.8432

50-Day SMA

0.8803

20-Day SMA

0.8877

2011 CHF High

0.7079

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

Twitter: @MBForex
WEB:
www.DailyFX.com

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.

Twitter: @MBForex
WEB: www.DailyFX.com

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