Forexpros – The U.S. dollar was lower against the Swiss franc on Thursday, as market sentiment slightly improved after a successful Spanish bond auction and ahead of a highly anticipated monetary policy statement by the European Central Bank, later in the day.
USD/CHF hit 0.9776 during European early afternoon trade, the daily low; the pair subsequently consolidated at 0.9791, shedding 0.39%.
The pair was likely to find short-term support at 0.9736, Wednesday’s low and resistance at 0.9872, the high of July 13.
Spain successfully auctioned EUR3.13 billion of government bonds, the top end of the targeted range, but borrowing costs were higher while demand was weaker.
Following the auction, the yield on Spanish 10-year bonds dropped back to an intra-day low of 6.64%, while the yield on Italian 10-year bonds rose to 5.82%.
Investors were eyeing the ECB’s upcoming meeting as expectations that the bank may resume its bond buying program, to help lower Spanish and Italian borrowing costs, have been building since central bank President Mario Draghi pledged last week to do whatever it takes to preserve the euro.
Markets were jittery however, amid concerns that an inadequate policy response by the ECB could send markets lower.
Meanwhile, the greenback remained supported after the U.S. central bank stopped short of launching a third round of quantitative easing, at its policy-setting meeting on Wednesday.
The Fed did indicate, however, that it will “closely monitor” the economy and “will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions.”
Elsewhere, the Swissie was flat against the euro with EUR/CHF trading at 1.2017.
Also Thursday, official data showed that retail sales in Switzerland rose 3.7% in June, beating expectations for a 2.8% increase.
A separate report showed that the country’s SVME manufacturing index rose unexpectedly in July, but remained in contraction territory for the fourth successive month.
Later in the day, the U.S. was to release government data on initial jobless claims and factory orders.
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