Forex Pros – The U.S. dollar extended losses against the Swiss franc on Tuesday, as risk aversion escalated amid fears over possible monetary tightening by China and ongoing concerns over the euro zone’s sovereign debt crisis.
USD/CHF hit 0.8431 during European morning trade, the pair’s lowest since Friday; the pair subsequently consolidated at 0.8434, shedding 0.51%.
The pair was likely to find support at 0.8302, the low of June 30 and resistance at 0.8525, Friday’s high and a two-week high.
Speculation over a rate hike by China, possibly as soon as this weekend, mounted after the People’s Bank of China said in a statement Monday that inflationary pressures “are still high” while the economy continues to grow at a steady and relatively fast pace.
Elsewhere, ratings agency Moody’s said earlier that lenders who planned to rollover some of their Greek debt may have to take impairment charges on the original, unpaid bonds but the agency stopped short of saying that the plan would result in a default.
On Monday, ratings agency Standard and Poor’s said a plan by French lenders to rollover Greek debt would amount to a “selective default” if implemented.
The Swissie was also sharply higher against the euro, with EUR/CHF tumbling 0.91% to hit 1.2214.
Also Tuesday, official data showed that retail sales in the euro zone slumped in May, posting their biggest fall in a year.
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