Forex Pros – The Swiss franc slipped against the U.S. dollar on Wednesday, giving up some of the previous session’s hefty gains, as risk appetite was hit by concerns over contagion in the euro zone after Portugal’s debt rating was slashed to junk.
USD/CHF hit 0.8444 during European morning trade, the daily high; the pair subsequently consolidated at 0.8422, gaining 0.20%.
The pair was likely to find support at 0.8302, the low of June 30 and resistance at 0.8505, Tuesday’s high.
On Tuesday, ratings agency Moody’s downgraded Portugal’s credit rating by four notches to Ba2, citing concerns that the country will not be able to fully meet deficit reduction and debt stabilization targets set out in its loan agreement with the European Union and International Monetary Fund.
Moody’s said there was a “growing risk” that Portugal may need a second round of rescue funds before it can return to capital markets.
Sentiment was also hit following reports that banks have sold off a substantial proportion of their Greek government-bond holdings despite pledges not to do so, undermining expectations that private bondholders would contribute to a bailout for Greece.
Meanwhile, the Swiss franc was up against the euro, with EUR/CHF shedding 0.20% to hit 1.2102.
Later Wednesday, the U.S. Institute of Supply Management was to publish a report on service sector growth.
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