On Thursday the Swiss franc traded steadily against the US dollar ahead of crucial US data, but gains were capped as uncertainty over the Federal Reserve Banks asset purchases grew, pressuring demand for the dollar.
USD/CHF fell to 0.9129 during European morning trade, lowest value since February 7th, after which consolidation followed at 0.9210. Support was expected at February 7th low, 0.9066, while resistance was to be encountered at Wednesdays high, 0.9286.
European shares plunged on Thursday, following the sharp losses during the Asian session, as fears over the prospect of an exit of the central bank stimulus triggered a large sell-off in risk assets and the US dollar.
Earlier this week Bank of Japan disappointed market expectations by not taking measures to ease volatility in the government bond market. Bank of Japan’s lack of action, along with expectations that the Federal Reserve will begin to reduce scale of easing has encouraged widespread risk aversion.
Meanwhile, it became clear that Producer and Import Prices index in Switzerland unexpectedly dropped by 0.3% during May on a monthly basis, opposing data during the previous month, which showed a 0.2% increase. Forecasts pointed no change in the indicator. On annual basis, Producer and Import Prices index also decreased by 0.2% in May, a bit further in comparison with the preceding period, when the drop was 0.1%. Projections showed a 0.1% rise. Major reason behind these results were lower oil and oil-based products prices.
The franc was steady against the euro as well, with EUR/CHF adding a mere 0.02% to reach 1.2283.
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