Forexpros – The U.S. dollar was sharply lower against the safe haven Swiss franc on Tuesday, falling to a fresh record low for the third consecutive day amid escalating concerns over the health of the global economy, boosting demand for safe haven assets.
USD/CHF hit 0.7360 during European morning trade, an all-time low; the pair subsequently consolidated at 0.7412, tumbling 1.8%.
The pair was likely to find short-term support at 0.7360, the daily low and the record low and resistance at 0.7651, Monday’s high.
The greenback dropped sharply against the Swissie on Monday, tumbling nearly 1.65%, as market sentiment was rattled following an historic downgrade of U.S. government debt by ratings agency Standard & Poor’s.
Meanwhile, a move by the European Central Bank to purchase Italian and Spanish government bonds failed to ease fears that the debt crisis could spill over to the region’s third and fourth largest economies.
Adding to global concerns, a report from China’s National Bureau of Statistics showed that consumer price inflation rose by a seasonally adjusted 6.5% in July, the fastest pace in three years.
The stronger-than-expected inflation data dampened hopes that the world’s second largest economy would loosen monetary policy in the near-term.
Also Tuesday, official data showed that Swiss consumer sentiment fell more-than-expected to minus 17.0 in the three months to July, disappointing expectations for a decline to minus 7.0, as households turned more pessimistic about the country’s economic prospects in the coming 12 months.
The Swissie was also higher against the euro, with EUR/CHF dropping 1.05% to hit 1.0590.
Later in the day, the U.S. was to publish preliminary data on nonfarm productivity and labor costs.
In addition, the Federal Reserve was to announce the federal funds rate. The announcement will be followed by the bank’s rate statement, which could provide hints regarding further monetary easing.
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