Swiss Franc Declines Amid Risk Appetite

06:20, 22nd July 2014

(RTTNews) - The Swiss franc weakened against the other major currencies in the European session on Tuesday amid risk appetite, as investors focus on earnings and signs of improvement in the world's largest economy.

The U.K.'s FTSE 100 index is currently up 0.61 percent or 41.15 points at 6,769, France's CAC 40 index is up 0.69 percent or 29.77 points at 4,334 and Germany's DAX is up 0.57 percent or 54.94 points at 9,666.

In corporate news, Switzerland's second largest bank Credit Suisse reported a loss for the second quarter, compared to a profit last year, hit by a hefty charge related to assistance given to certain U.S. taxpayers.

Switzerland's trade surplus declined more-than-expected in June as imports rose faster than exports, data from the Swiss Federal Customs Administration showed. The trade surplus was at CHF 1.38 billion in June, which was less than the CHF 2.78 billion expected by economists. In May, the country registered a surplus of CHF 2.85 billion.

Imports grew a real 7.8 percent year-on-year to CHF 15.49 billion in June. Exports also rose, though at a slower rate than imports, by 2.2 percent annually in real terms to CHF 16.87 billion.

The Swiss franc fell to a 5-week low of 0.9004 against the U.S. dollar, from an early high of 0.8977. If the franc extends its downtrend, it is likely to find support around the 0.911 area.

Moving away from an early high of 1.5325 against the pound, the franc slipped to a 5-day low of 1.5399. Continuation of bearish trend may lead the franc to a support around the 1.54 mark.

Data from the Office for National Statistics showed that U.K. budget deficit excluding financial interventions increased in June. Public sector net borrowing excluding financial interventions totaled GBP 11.4 billion, which was GBP 3.8 billion than last June. It was forecast to rise to GBP 10.5 billion in June.

Against the yen, the franc fell to a 5-1/2-month low of 112.59 from an early 4-day high of 113.04. At yesterday's close, the franc was trading at 112.87 against the yen. The franc may test support near the 112.40 zone.

Japan's government downgraded growth outlook for the fiscal year 2014, citing weak exports and subdued demand after the sales tax hike in April. The Council on Economic and Fiscal Policy, the top advisory panel, said the real gross domestic product will grow 1.2 percent in the fiscal year ending March instead of 1.4 percent estimated in January.

Against the euro, the Swiss franc fell to 1.2152 from an early high of 1.2141. If the franc continues its downtrend, it is likely to find support around the 1.216 region.

Looking ahead, U.S. consumer price inflation report for June, house price index for May and existing home sales for June are due to be released in the New York session.