Yen falls to weakest since 2010 on Japan stimulus

Swiss Franc

The Swiss franc slid to the weakest level in more than a year against the euro after a government report showed Switzerland’s consumer prices extended their longest slump in at least four decades.

The franc declined after Zuercher Kantonalbank said yesterday it reserved the right to set negative interest rates on franc deposits for its retail customers. The Swiss National Bank imposed a ceiling for the franc of 1.20 versus the euro in September 2011 to combat the threat of deflation.

“If traders needed any other reason to go long on the euro versus the franc, they got it today with the release of Swiss CPI,” Peter Rosenstreich, chief foreign-exchange strategist at Swissquote Bank SA in Geneva, wrote today in a note to clients. A long position is a bet an asset will gain.

The franc lost as much as 0.6% to 1.2201 per euro, the weakest since December 2011, before trading at 1.2175, down 0.4%. The Swiss currency rose 0.3% to 91.18 centimes per dollar.

The Bloomberg-JPMorgan Asia Dollar Index rose 0.3% this week to 118.66 and reached 118.73 today, the highest since September 2011.

Improved Sentiment

China, the top destination for exports from South Korea, Taiwan, Malaysia and Thailand, said yesterday that imports gained 6% in December, the fastest growth in six months. Exports climbed 14%, the most since May.

“Sentiment toward China has improved,” said Adam Cole, global head of foreign-exchange strategy at Royal Bank of Canada in London. “That’s helping the Asian currencies.”

South Africa’s rand slid versus all of its major counterparts a day after Fitch Ratings cut the nation’s credit rating because of slowing economic growth, a widening budget deficit and rising unemployment. The currency weakened 1% to 8.7377 to the dollar.

The Australian dollar weakened versus the greenback as its failure to break through resistance at $1.06 signaled gains in the currency may have been too rapid. The Aussie fell 0.6% to $1.0540 after being unable to exceed $1.0599, the highest since Sept. 14, for a second straight day. Resistance is a level on a chart where sell orders may be clustered.

Relative Strength

The Australian dollar’s 14-day relative strength index versus the greenback reached 68 yesterday, near the 70 level that some traders see as a sign it has risen too quickly and may be due to reverse course.

The euro headed for a weekly gain versus all 16 of its most-traded counterparts. It last reached $1.37, Goldman Sachs’s target, in November 2011.

European Central Bank President Mario Draghi said yesterday the economy should regain momentum after policy makers left the main refinancing rate at a record low of 0.75% at a meeting in Frankfurt.

Bloomberg News

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