The Swiss franc that edged higher against its major rivals at the beginning of Thursday’s North American session leveled off shortly. Interest rate decisions from the European Central Bank and the Bank of England also pushed the franc to some extent.
European Central Bank on Thursday left its key interest rate unchanged at a record low of 1% for the fifteenth straight month. The decision was in line with economists’ expectations.
Growth prospects for the Eurozone economy in the second quarter have strengthened and the third quarter is likely to be better than expected, European Central Bank President Jean-Claude Trichet said today at the press briefing after the ECB rate announcement.
But, he noted that the second half of this year is unlikely to be as buoyant as the second quarter, which he described as highly exceptional.
Earlier in the day, the Bank of England left its key interest rate unchanged at a historic low of 0.5% and maintained the size of the quantitative easing at GBP 200 billion. The decision came in line with economists’ expectations.
Despite an acceleration in economic growth, policy makers are cautious about the sustainability of recovery amid a severe fiscal squeeze.
In economic news from the euro-area, German factory orders increased strongly in June following a slight fall in May driven by a surge in global demand, data released by the Federal Ministry of Economics and Technology showed today.
Orders rose 3.2% month-on-month, reversing May’s revised fall of 0.1%. The growth was much better than the 1.4% increase economists had forecast.
On an annual basis, total factory orders grew 24.6% in June compared to May’s revised 25.1% gain. Economists had foreseen a 21.6% increase.
The Swiss franc appreciated by more than 1.1 percent to reach as high as 1.6575 against the pound before holding steady around 8:50 am ET from its early Asian session’s fresh 7-week low of 1.6765.
The franc is presently worth 1.6587 against the pound and a further rally may push the alpine unit to challenge the 1.6470 resistance level.
Against the euro, the Swiss franc soared up to 1.3757 around 9:35 am ET from its Asian session’s 7-week low of 1.3878. On the upside, the domestic currency may challenge the 1.3730 resistance level. The pair that closed yesterday’s deals at 1.3861 is presently quoted at 1.3787.
The Swiss franc rose to as high as 1.0415 against the US dollar before reversing direction around 8:50 am ET. The greenback-franc pair that closed yesterday’s deals at 1.0533 is presently quoted at 1.0478.
If the Swiss franc gains further, it may find target around the 1.0350 level and a move above this level could set its strongest mark in more than 7-months.
In the U.S., the Labor Department said in a report that initial jobless claims rose to 479,000 from the previous week’s revised figures of 460,000.
The increase came as a surprise to economists, who had expected jobless claims to edge down to 455,000 from the 457,000 originally reported for the previous week.
Pulling back from its early European session’s peak, the Swiss franc slipped to a low of 81.99 against the yen and the pair is approaching yesterday’s 5-week low of 81.71. The franc-yen pair is currently worth near Wednesday’s closing value of 81.96.
The Japanese economy may need more stimulus spending from the government to safeguard the recovery, Prime Minister Naoto Kan said today. Kan said that although growth was picking up, global economic conditions were less than favorable and that unemployment was too high.
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