US dollar showed a certain retreat against the Swiss franc through the course of a subdued trade on Monday, despite the continuing expectations, that the Federal Reserve Bank will soon begin tapering its Quantitative Easing, which gave support to the greenback.
USD/CHF slid to a session low at 0.9371 at 9:42 GMT, the lowest point since July 17th, after which consolidation followed at 0.9395. Support was expected to be received at July 17th low, 0.9358, while resistance was to be encountered at July 19th high, 0.9462.
On July 18th, in his second day of testimony on monetary policy before the Financial Services Committee in US Congress last week, FED Chairman Ben Bernanke reiterated that monetary policy will remain accommodative in the foreseeable future, even as the central bank begins to scale back its asset purchasing program. On July 17th Bernanke said the central bank expected to begin tapering asset purchases by the end of the year, but also added that monetary policy was not on a “preset course”.
In addition, during the weekend finance ministers and central bankers from the G-20 group stated, that future changes to monetary policy should be “carefully calibrated and clearly communicated”, so that US and Japan not to cause transnational disturbances, embarking on a pare back of their stimulus.
Meanwhile, the Governor of Swiss National Bank (SNB) Jordan announced that there will be no changes, regarding the EUR/CHF exchange rate ceiling, currently at 1.2000. “We will maintain our current policy for as long as necessary,” Jordan said on July 20 in Moscow, where he attended a meeting of Group of 20 finance ministers, cited by Bloomberg. “This monetary policy stance is needed to act within our mandate.” The SNB imposed the limit on the franc in September 2011, accumulating foreign-currency reserves equal to about three-quarters of Switzerland’s economic output per year as a result of its efforts to defend this cap. Abolishing this limit was still a ways off, according to Jordan. The central bank stressed on the risk of deflation as its argument for the cap, while in the mean time, banks expectations pointed that the consumer price index in Switzerland may drop by 0.3% during this year.
Elsewhere, the franc was trading steadily against the euro, as EUR/CHF cross increased by 0.11% to 1.2378 at 11:43 GMT.
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