Franc Climbs Amid Risk Aversion
08:13, 16th September 2014
(RTTNews) - The Swiss franc strengthened against its major rivals in European deals on Tuesday, as traders became risk-averse ahead of the Federal Reserve's monetary policy announcement on Wednesday and upcoming Scottish referendum on Thursday.
The FOMC begins its regular two-day policy meeting later in the day, amid concerns that it would normalize its monetary policy soon. The Fed is on track to wind down its asset purchases completely by its October meeting, with rate hike sometime in mid-2015.
With polls suggesting that Scotland's referendum is too close to call, traders turned cautious about the widespread implications of the potential split-off from the Union.
The Swiss National Bank's announcement on monetary policy is due on Thursday. The bank is widely expected to leave its three-month Libor unchanged at 0.0-0.25 percent and the currency ceiling at CHF 1.2 per euro as the market tensions remain under control.
The franc hit a 4-day high of 1.2082 against the euro from yesterday's closing value of 1.2099. Further weakness may take the franc to a resistance around the 1.20 level.
Germany's investor confidence weakened less-than-expected in September, survey results from the Centre for European Economic Research/ZEW showed.
The ZEW economic sentiment index fell to 6.9, which was above economists' forecast for a score of 5.
The Swiss currency reversed from an early low of 0.9362 against the greenback, edging up to 0.9321. The next possible resistance for the franc lies around the 0.926 region.
The franc firmed to a 6-day high of 1.5092 against the pound during early European deals, after having fallen to 1.5184 at 5:00 pm ET. Continuation of uptrend may take the franc to a resistance around the 1.50 zone.
U.K. inflation slowed as expected in August on falls in prices of motor fuels and food, data from the Office for National Statistics showed.
Consumer prices rose 1.5 percent year-on-year in August, slower than the 1.6 percent rise in July.
The franc edged up to 114.81 against the yen, compared to 114.57 hit at Monday's close. Next key resistance for the franc lies around the 115.5 area.
Looking ahead, the U.S. producer price index for August is due to be released in the New York session.
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