On Thursday, the USD/CHF pair continued its drop after showing a slight rebound on Wednesday as the sentiment was bolstered by the European debt-relief accord and upbeatU.S.data which damped demand on the dollar as a favorite safe haven.
As the Swiss franc had lost its appeal as a refuge after the several interventions that took place since September and amidst speculations the bank will raise the euro cap against the franc to 1.40 from the current 1.20, especially as some earnings reports showed that many Swiss companies were affected by the franc’s appreciation, the pair is continuing its downside direction.
The market reacted positively to the agreement between European leaders to make private sector bondholders to bare 50% of losses of Greek debt to cut the Greek debt by 100 billion euros, while leveraging the firepower of the EFSF to 1 trillion euros from the current 440 billion euros.
The debt deal restored confidence and was deemed as a good plan by investors whom took long positions on risky and high-yielding assets.
Other findings of the summit included measures on bank recapitalization which will reach 106 billion euros, bigger role for the International Monetary Fund in addition to a commitment fromItalyto do more effort to slash its huge budget deficit while the European Central Bank will maintain bond purchases.
Moreover, the optimisticU.S.data added to the positive sentiment as theU.S.economy grew 2.5%, the fastest pace in a year, from the second quarter’s expansion of 1.3%. Also, initial jobless claims fell by 2,000 to 402,000 in the week ended October 22, showing improvement in the labor sector.
On Friday, the week ends with the release KOF Swiss leading indicator at 09:30 GMT which is estimated to retreat to 1.00 in Oct. from 1.21 a month earlier, while in the U.S. personal income and spending will be under scrutiny at 12:30 GMT, followed by University of Michigan confidence will show a rise to 58.0 in Oct. from the prior 57.5.
Data is expected to have an impact on the pair’s movements as investors will keep an eye lid on data to see whether they will be able to rebound amid the current sluggish global growth.
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