The Swiss Franc is still getting appreciated after the Swiss Central Bank’s decision from the last week. The USDCHF struggles under the support level at 0.8815 while the EURCHF managed to return to parity, but this equilibrium appears to be in danger, at least in the short term. Today the Swiss economy is due to report the Producer Price Index, which is expected slightly better. As the appreciation of the Swiss Franc will clearly trouble the Swiss exports we may expect shares of the luxury companies to go down by the end of the year.
EURUSD, the most traded currency pair is still on a falling trend. On Friday, the pair broke below the 1.15 psychological support zone and tested 1.1459 level before bouncing back. The “Swiss Thursday” seems to have made traders highly emotional and with turbulences in the Eurozone, the falling European inflation, elections in Greece and the Quantitative Easing of Mario Draghi the pressure on the Euro is being maintained and the European currency is expected to fall further. Tomorrow market participants will be watching the publishing of the German ZEW Economic Sentiment Index, which is anticipated to improve. Don’t eliminate the possibility of surprises in this scenario.
Another economy that worries investors increasingly seems to be the American one. Why? Because inflation continues to fall, mostly due to the falling commodity prices. On Friday, the Consumer Prices Index fell down to -0.4% and the Core CPI decreased to 0.0%. May these be the delayed effects of the QE? Yet to be seen. Besides all that the Capacity Utilization Rate was published down to 79.7%, the monthly Industrial Production went down to -0.1% and the only good news was the University of Michigan Consumer Sentiment increasing to 98.2 points. Today and tomorrow we don’t expect any important economic indicators to be published. It’s important to observe the unabated trust of market participants in the American dollar, which doesn’t lose ground under these circumstances.
Which financial instrument is the winner after all these high tense events?
Gold, of course, and the other precious metals such as silver and platinum as investors tend to choose a security with these commodities. Gold is currently trading at 1277 dollars per ounce. However on the medium to long term period possible corrective waves could be expected despite increased economic tensions in Europe.
Meanwhile, oil prices seem to be determined to stabilize at a higher level. With the stabilized oil prices, the European stock market strengthened. The German DAX index appreciated up to 10314.7 points and the Bulls could continue to ride the index if Mario Draghi announces his much-anticipated QE program this Thursday. The American capital market, on the other side, seems to correct the appreciation movement in the last days, but eventually it may resume the increasing tendency.
Today we may consider a different volatility as the liquidity is falling down because of the bank holiday in the United States.