In early European deals on Monday, the Swiss franc soared against other major currencies. The franc jumped to a new multi-week high against the dollar and a new multi-day high against the yen.
The Swiss franc has been in an upward channel after the Swiss central bank reiterated last week that the risk of deflation has largely disappeared, fueling speculation it will stop resisting gains in the currency.
The Swiss National Bank said on Friday in its quarterly bulletin that it would take necessary measures to ensure price stability should the sovereign debt crisis in the euro area “lead to a renewed threat of deflation.”
The SNB started selling the franc in March 2009 to ward off deflation and revive the economy amid the worst global financial crisis since World War II. Pressure on the Swiss currency to appreciate increased as the euro tumbled on concern that countries from Greece to Portugal would default on their debt and lead to the collapse of the shared currency.
The Swiss franc strengthened against the US dollar in early European deals on Monday. As of now, the franc is trading at a new multi-week high of 1.0893 per dollar, compared to 1.0945 hit late New York Friday. On the upside, 1.050 is seen as the next target level for the Swiss currency.
During European deals on Monday, the Swiss franc climbed against the Japanese yen. The franc-yen pair that closed last week’s trading at 81.67 is currently trading at a new multi-day high of 82.14. If the franc advances further, it may likely target the 82.6 level.
Retail sales in Japan were up 2.8 percent on year in May, the Ministry of Economy, Trade and Industry said today. That was well below analyst expectations for a 4.8 percent annual increase following the 4.9 percent spike in April.
On a monthly basis, retail sales fell 2.0 percent – sharply lower that estimates for a 0.1 percent decline after the 0.5 percent increase in April.
The Swiss franc rose against the currencies of U.K. and Europe in early European session on Monday. At present, the franc is worth 1.6405 against the pound and 1.3480 against the euro. The next upside target level for the Swiss currency is seen at 1.631 against the pound and 1.346 against the euro. The euro-franc and the pound-franc pairs were worth 1.3551 and 1.6486, respectively at Friday’s close.
U.K. house prices edged up 0.1% in June from the previous month, following a 0.2% rise seen in May, a survey conducted by the Hometrack showed today. Annually, house price inflation increased to 2.1% from 2% in May.
There are no major economic reports due for release from the Europe in the upcoming hours.
The U.S. personal income and spending reports for May are expected at 8:30 am ET.