http://www.bloomberg.com/news/2011-08-31/franc-rallies-as-snb-refrains-from-measures-to-curb-advance-euro-weakens.html
Franc Gains as Central Bank Avoids Further Weakening Measures; Euro Drops
By Catarina Saraiva and Garth Theunissen - Aug 31, 2011 8:34 AM PT
The franc gained 0.9 percent to 1.1736 per euro at 10:30 a.m. in London, snapping three days of declines. Photographer: Gianluca Colla/Bloomberg
Enlarge image Franc Rises as SNB Refrains From Weakening Measures
The headquarters of the Swiss National Bank are seen in Bern. Photographer: Gianluca Colla/Bloomberg
The franc rose versus all its 16 major peers as the Swiss National Bank refrained from announcing new steps to curb its gains, after intervening or referring to the currency’s strength on the first three Wednesdays of August.
The dollar erased earlier losses against the euro as better-than-forecast economic data damped bets the Federal Reserve may take further steps to stimulate growth. Mexico’s peso rallied as stocks rose, boosting demand for higher-risk assets. The franc gained the most versus the greenback and the yen since Aug. 9, the day the Fed pledged to keep its benchmark interest rate at almost zero until at least mid-2013.
“The lack of any immediate new action from the Swiss government looks to have driven the Swiss franc higher,” said Brian Dolan, chief strategist at FOREX.com, a unit of the online currency-trading firm Gain Capital in Bedminster, New Jersey. “As we get this better data, it reduces the possibility of further Fed easing, and that turns into a dollar positive.”
The franc gained 2.3 percent to 1.1568 per euro at 11:30 a.m. in New York and climbed as much as 2.5 percent. The Swiss currency advanced as much as 2.5 percent to 79.94 centimes per dollar before trading at 80.19 centimes, up 2.3 percent. The yen gained 0.4 percent to 110.33 per euro. It strengthened 0.3 percent to 76.49 per dollar.
The euro fell 0.2 percent to $1.4419, from $1.4441 yesterday. It’s up 0.2 percent versus the dollar this month. Mexico’s peso advanced 1.5 percent to 12.3461 per dollar.
The Standard & Poor’s 500 Index rose 0.7 percent.
Factory Orders Rise
The euro fell versus most major peers as Commerce Department data showed orders placed with U.S. factories rose in July by the most in four months, increasing 2.4 percent. A Bloomberg News survey forecast a 2 percent gain. The Institute for Supply Management-Chicago Inc.’s business barometer fell less than projected this month, declining to 56.5. A Bloomberg survey estimated the gauge would drop to 53.3.
Data from ADP Employer Services earlier showed companies in the U.S. added 91,000 workers to payrolls in August, less than the 100,000 forecast. A government report on Sept. 2 is projected to show U.S. nonfarm payroll growth slowed to 70,000 this month from 117,000 in July.
Minutes from Fed policy makers’ meeting on Aug. 9 released yesterday showed that a few, unidentified Federal Reserve policy makers “felt that recent economic developments justified a more substantial move” beyond the pledge adopted at the meeting to hold its key interest rate at a record low until mid-2013. The central bank will meet again Sept. 20.
Quantitative Easing
The Fed bought $600 billion of Treasuries from November to June in a second round of quantitative easing to stimulate growth. Intercontinental Exchange Inc.’s Dollar Index dropped 3.9 percent over the eight-month period as the extra liquidity inundated the market with supply.
Swiss authorities have announced measures to halt gains in the franc or released statements calling it “overvalued” on Aug. 3, 10 and 17. The SNB declined to comment today on currency intervention when contacted by Bloomberg News.
The currency has surged 10 percent this year against a basket of nine developed-nation peers tracked by Bloomberg Correlation-Weighted Currency Indexes.
“What the Swiss National Bank has done has caused the Swiss franc to weaken, but unless further easing is taken, we’ve established the extent of how weak the franc can get,” said John McCarthy, managing director of currency trading at ING Groep NV in New York. “Given the fact that the cost of holding Swiss francs is not prohibitive at this point in time, people went back into them.”
Swiss Stimulus
Swiss Economy Minister Johann Schneider-Ammann said he doesn’t expect the franc to weaken anytime soon after pledging a stimulus package to help counter the impact of a strengthening currency on the economy.
In June 2010, the SNB had suspended 15 months of currency interventions that led to a $21 billion record loss last year.
The euro weakened today as data showed unemployment in the region held at 10 percent in July from the previous month, when adjusted for seasonal swings, the European Union’s statistics office in Luxembourg said in a statement.
Norway’s krone gained the most over the past month against the nine counterparts tracked by Bloomberg Correlation-Weighted Currency Indexes. It rose 1.7 percent. The Swiss franc dropped 1.3 percent, and the euro rose 1.2 percent. New Zealand’s dollar fell the most, dropping 2 percent.
The euro may weaken to $1.33 over the next 12 months, according to Royal Bank of Canada’s RBC Capital Markets unit.
“Investors that think the world is falling apart and are worried about capital preservation still view the yen and the franc as safe havens,” said Elsa Lignos, an RBC currency strategist in London. “We like the yen. It just seems a little less overstretched than the Swissie.”
New Zealand Dollar
New Zealand’s dollar was poised for its biggest monthly decline in a year versus the yen after a survey by ANZ National Bank Ltd. showed business confidence declined in August.
A net 34.4 percent of companies surveyed in the nation expect the economy will improve over the next 12 months, down from 47.6 percent in July, according to the ANZ survey released today. The net figure subtracts the number of pessimists from the number of optimists.
New Zealand’s dollar traded at 65.40 yen, compared with 65.46 yesterday, and has lost 3.2 percent this month. It gained 0.3 percent to 85.55 U.S. cents, from 85.31 cents, set for a 2.7 percent slide since the end of July.
To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Garth Theunissen in London gtheunissen@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
Franc Gains as Central Bank Avoids Further Weakening Measures; Euro Drops
By Catarina Saraiva and Garth Theunissen - Aug 31, 2011 8:34 AM PT
The franc gained 0.9 percent to 1.1736 per euro at 10:30 a.m. in London, snapping three days of declines. Photographer: Gianluca Colla/Bloomberg
Enlarge image Franc Rises as SNB Refrains From Weakening Measures
The headquarters of the Swiss National Bank are seen in Bern. Photographer: Gianluca Colla/Bloomberg
The franc rose versus all its 16 major peers as the Swiss National Bank refrained from announcing new steps to curb its gains, after intervening or referring to the currency’s strength on the first three Wednesdays of August.
The dollar erased earlier losses against the euro as better-than-forecast economic data damped bets the Federal Reserve may take further steps to stimulate growth. Mexico’s peso rallied as stocks rose, boosting demand for higher-risk assets. The franc gained the most versus the greenback and the yen since Aug. 9, the day the Fed pledged to keep its benchmark interest rate at almost zero until at least mid-2013.
“The lack of any immediate new action from the Swiss government looks to have driven the Swiss franc higher,” said Brian Dolan, chief strategist at FOREX.com, a unit of the online currency-trading firm Gain Capital in Bedminster, New Jersey. “As we get this better data, it reduces the possibility of further Fed easing, and that turns into a dollar positive.”
The franc gained 2.3 percent to 1.1568 per euro at 11:30 a.m. in New York and climbed as much as 2.5 percent. The Swiss currency advanced as much as 2.5 percent to 79.94 centimes per dollar before trading at 80.19 centimes, up 2.3 percent. The yen gained 0.4 percent to 110.33 per euro. It strengthened 0.3 percent to 76.49 per dollar.
The euro fell 0.2 percent to $1.4419, from $1.4441 yesterday. It’s up 0.2 percent versus the dollar this month. Mexico’s peso advanced 1.5 percent to 12.3461 per dollar.
The Standard & Poor’s 500 Index rose 0.7 percent.
Factory Orders Rise
The euro fell versus most major peers as Commerce Department data showed orders placed with U.S. factories rose in July by the most in four months, increasing 2.4 percent. A Bloomberg News survey forecast a 2 percent gain. The Institute for Supply Management-Chicago Inc.’s business barometer fell less than projected this month, declining to 56.5. A Bloomberg survey estimated the gauge would drop to 53.3.
Data from ADP Employer Services earlier showed companies in the U.S. added 91,000 workers to payrolls in August, less than the 100,000 forecast. A government report on Sept. 2 is projected to show U.S. nonfarm payroll growth slowed to 70,000 this month from 117,000 in July.
Minutes from Fed policy makers’ meeting on Aug. 9 released yesterday showed that a few, unidentified Federal Reserve policy makers “felt that recent economic developments justified a more substantial move” beyond the pledge adopted at the meeting to hold its key interest rate at a record low until mid-2013. The central bank will meet again Sept. 20.
Quantitative Easing
The Fed bought $600 billion of Treasuries from November to June in a second round of quantitative easing to stimulate growth. Intercontinental Exchange Inc.’s Dollar Index dropped 3.9 percent over the eight-month period as the extra liquidity inundated the market with supply.
Swiss authorities have announced measures to halt gains in the franc or released statements calling it “overvalued” on Aug. 3, 10 and 17. The SNB declined to comment today on currency intervention when contacted by Bloomberg News.
The currency has surged 10 percent this year against a basket of nine developed-nation peers tracked by Bloomberg Correlation-Weighted Currency Indexes.
“What the Swiss National Bank has done has caused the Swiss franc to weaken, but unless further easing is taken, we’ve established the extent of how weak the franc can get,” said John McCarthy, managing director of currency trading at ING Groep NV in New York. “Given the fact that the cost of holding Swiss francs is not prohibitive at this point in time, people went back into them.”
Swiss Stimulus
Swiss Economy Minister Johann Schneider-Ammann said he doesn’t expect the franc to weaken anytime soon after pledging a stimulus package to help counter the impact of a strengthening currency on the economy.
In June 2010, the SNB had suspended 15 months of currency interventions that led to a $21 billion record loss last year.
The euro weakened today as data showed unemployment in the region held at 10 percent in July from the previous month, when adjusted for seasonal swings, the European Union’s statistics office in Luxembourg said in a statement.
Norway’s krone gained the most over the past month against the nine counterparts tracked by Bloomberg Correlation-Weighted Currency Indexes. It rose 1.7 percent. The Swiss franc dropped 1.3 percent, and the euro rose 1.2 percent. New Zealand’s dollar fell the most, dropping 2 percent.
The euro may weaken to $1.33 over the next 12 months, according to Royal Bank of Canada’s RBC Capital Markets unit.
“Investors that think the world is falling apart and are worried about capital preservation still view the yen and the franc as safe havens,” said Elsa Lignos, an RBC currency strategist in London. “We like the yen. It just seems a little less overstretched than the Swissie.”
New Zealand Dollar
New Zealand’s dollar was poised for its biggest monthly decline in a year versus the yen after a survey by ANZ National Bank Ltd. showed business confidence declined in August.
A net 34.4 percent of companies surveyed in the nation expect the economy will improve over the next 12 months, down from 47.6 percent in July, according to the ANZ survey released today. The net figure subtracts the number of pessimists from the number of optimists.
New Zealand’s dollar traded at 65.40 yen, compared with 65.46 yesterday, and has lost 3.2 percent this month. It gained 0.3 percent to 85.55 U.S. cents, from 85.31 cents, set for a 2.7 percent slide since the end of July.
To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Garth Theunissen in London gtheunissen@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
