On Thursday, the pair showed volatile movements on the back of the mixed sentiment which gathered correctional movements and mounting concerns from the euro area, where volume was not high due to thanks giving holiday in the United States.
The market experienced some correctional movements in the early trading after the drop in shares and high-yielding assets this week, boosted by an upbeat German IFO report which showed that business climate gauge advanced to 106.6 in Nov. from 106.4 in Oct., compared with estimates of 105.2, providing some hopes amid the latest downbeat data and ongoing European debt woes.
On the other hand, worries form the euro area remained as the concerns that haunted markets on Wednesday after the rise in German bond yields and decline in demand in the auction dominated investors’ behavior.
Fitch ratings lowered Portugal’s credit rating by one notch sending it to junk status with negative outlook.
As both economies lacked fundamentals, the pair’s movements remained within narrow range on Thursday.
On Wednesday, UBS put the franc under pressure after it said “the Swiss economy slowed significantly in the second half of the year as the strong franc squeezed exporters’ profit margins,” while it predicts growth to slow further to 1% in the fourth quarter.
UBS business cycle indicator showed a drop to 1.4% in the third quarter from 3.3% a year before.
These reports will more likely put pressure on the SNB to intervene to curb the franc’s appreciation amid the high demand on the dollar as a favorite safe haven due to the turbulences in European markets which may increase forecasts of seeing further rise in the pair.
The week ends with the release of no data from both economies which suggest that the pair will follow the general sentiment in market.
Probably, the main focus will remain the latest developments from the euro area amid talks between European leaders regarding the role of the ECB in solving the crisis.
Originally posted here
