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Forexpros – The euro moved higher against the U.S. dollar in Asian trade Wednesday, as Wall Street suffered its third straight losing session and the Swiss National Bank took the extraordinary step of introducing a minimum for the EUR/CHF exchange rate.
EUR/USD hit 1.4008 in early Asian trade, the pair’s highest since Monday; the pair subsequently consolidated at 1.4003 gaining 0.03%.
The pair was likely to find support at 1.3838, the low of July 12, and resistance at 1.4378, last Thursday’s high.
Earlier Tuesday, the Swiss franc plunged versus its major counterparts, including the euro, as the Swiss National Bank set a floor for EUR/CHF at 1.20 in an effort to lessen the negative effects a strong currency would have on exports.
“With immediate effect, the SNB will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities,” the SNB said in a statement.
The move by Switzerland’s central bank comes at a critical time for negotiations between European finance officials who are debating the details of the European Financial Stability Facility, a bailout fund for debt threatened euro-zone members.
European stocks ended Tuesday trading mixed as France’s CAC 40 dropped 1.1% to 2,965.64, Britain’s FTSE 100 added 1% to 5,156.84, and Germany’s DAX fell by 1% to 5,193.97, after sinking more than 5% in Monday trade.
Wall Street shares rallied from session lows but still finished in the red for a third consecutive session dragged down by European debt jitters and last week’s disappointing U.S. jobs data.d
The Dow Jones Industrial Average lost 0.9& to 11,139.30, the Nasdaq Composite Index fell 0.26% to 2,473.83 and the S&P 500 shed 0.74% to close the day at 1,165.24.
Earlier in the day, the U.S. Institute of Supply Management reported that its non-manufacturing purchasing manager’s index rose by 0.6 to 53.3 in August, up from 52.7 in July.
The index came in above market expectations of a decline to 51.0 for the latest month.
Meanwhile, the euro was lower against the both British pound and the Japanese yen, with EUR/GBP down by 0.02% to hit 0.8777, and EUR/JPY falling 0.02% to hit 108.67.
Later Wednesday, Federal Reserve Bank President Charles Evans was scheduled to speak on the U.S. economic outlook at the Futures & Options Expo in Chicago.
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