Investing.com - The U.S. dollar plummeted to a four-month low against the Swiss franc on Friday, after the Federal Reserve announced plans to stimulate the U.S. economy with a third round of quantitative easing measures, sending the greenback broadly lower.
USD/CHF hit 0.9240 on Friday, the pair’s lowest since May 8; the pair subsequently consolidated at 0.9268 by close of trade on Friday, tumbling 2.04% over the week.
The pair is likely to find support at 0.9200, the low of May 8 and resistance at 0.9354, Friday’s high.
Demand for the safe haven greenback weakened after the Fed said on Thursday it will purchase USD40 billion of mortgage-backed securities every month until the labor market improves.
The Federal Open Market Committee also said it would likely keep the federal funds rate near zero through at least the middle of 2015. The prior guidance on the first rate increase had been late 2014.
The Fed’s decision to undertake a third round of quantitative easing came a week after the European Central Bank unveiled its own bond purchasing program, dubbed Outright Monetary Transactions, and a day after Germany’s Constitutional Court allowed the euro zone’s permanent rescue fund to move forward.
On the data front Friday, U.S. consumer prices increased by 0.6% in August, as gasoline prices rose by the largest amount in more than three years. Stripping out volatile food and energy costs, the so-called core price index rose 0.1%.
Separate data showed that U.S. retail sales rose a seasonally adjusted 0.9% in August, as spending rose sharply on autos and gasoline. Excluding autos, retail sales climbed 0.8%.
Also Friday, the University of Michigan's index on consumer sentiment hit 79.2 in September, up from 74.3 in August. Analysts were expecting a 74.0 reading.
Elsewhere, the Swissie fell to a nine-month low against the euro after the Swiss National Bank reaffirmed its commitment to defend the minimum exchange rate of CHF1.20 per euro with “the utmost determination.”
The central bank said Thursday it “remains committed to buy foreign currency in unlimited quantities for this purpose”, while adding that it “stands ready to take further measures at any time”.
The euro rallied to the highest level since January 6 against the Swissie, with EUR/CHF settling at 1.2168 by close of trade Friday.
Despite the strong gains, the euro remains vulnerable as Spain remained at the center of worries that it will need a bailout.
Spanish Finance Minister Luis de Guindos said Friday his country still needs time to see how support from the ECB would work before the government requested anything beyond its current bank bailout.
Separately, International Monetary Fund Managing Director Christine Lagarde denied a report in a Dutch newspaper that the IMF and ECB were in discussions regarding a potential bailout for Spain.
In the coming week, investors will continue to focus on Spain's fiscal health, amid ongoing speculation over how close the debt-strapped country is to asking for a full-blown euro zone bailout.
Spain is to hold an auction of 10-year government bonds, which will be an important test of investor appetite for the country’s debt.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 17
The U.S. is to publish an index of manufacturing activity in New York state.
Tuesday, September 18
Switzerland is to release a government report containing quarterly economic forecasts for major economic indicators, such as employment and inflation.
Later in the day, the U.S. is to release official data on the current account, as well as a report on the balance of domestic and foreign investment in long-term securities.
Wednesday, September 19
The ZEW Centre for Economic Research is to release a report on Swiss economic sentiment, an important indicator of economic health.
Later Wednesday, the U.S. is to publish official data on building permits, an important indicator of future construction activity, as well as data on housing starts, a leading indicator of economic health.
The country is also to publish government data on crude oil stockpiles, as well as an industry report on existing home sales.
Thursday, September 20
Switzerland is to publish official data on the trade balance, while the U.S. is to release its weekly government report on initial jobless claims, as well as an index of manufacturing activity in Philadelphia, leading indicators of economic health.
Friday, September 21
The Swiss National Bank is to publish its quarterly bulletin, which looks at economic conditions from the bank’s perspective.
USD/CHF hit 0.9240 on Friday, the pair’s lowest since May 8; the pair subsequently consolidated at 0.9268 by close of trade on Friday, tumbling 2.04% over the week.
The pair is likely to find support at 0.9200, the low of May 8 and resistance at 0.9354, Friday’s high.
Demand for the safe haven greenback weakened after the Fed said on Thursday it will purchase USD40 billion of mortgage-backed securities every month until the labor market improves.
The Federal Open Market Committee also said it would likely keep the federal funds rate near zero through at least the middle of 2015. The prior guidance on the first rate increase had been late 2014.
The Fed’s decision to undertake a third round of quantitative easing came a week after the European Central Bank unveiled its own bond purchasing program, dubbed Outright Monetary Transactions, and a day after Germany’s Constitutional Court allowed the euro zone’s permanent rescue fund to move forward.
On the data front Friday, U.S. consumer prices increased by 0.6% in August, as gasoline prices rose by the largest amount in more than three years. Stripping out volatile food and energy costs, the so-called core price index rose 0.1%.
Separate data showed that U.S. retail sales rose a seasonally adjusted 0.9% in August, as spending rose sharply on autos and gasoline. Excluding autos, retail sales climbed 0.8%.
Also Friday, the University of Michigan's index on consumer sentiment hit 79.2 in September, up from 74.3 in August. Analysts were expecting a 74.0 reading.
Elsewhere, the Swissie fell to a nine-month low against the euro after the Swiss National Bank reaffirmed its commitment to defend the minimum exchange rate of CHF1.20 per euro with “the utmost determination.”
The central bank said Thursday it “remains committed to buy foreign currency in unlimited quantities for this purpose”, while adding that it “stands ready to take further measures at any time”.
The euro rallied to the highest level since January 6 against the Swissie, with EUR/CHF settling at 1.2168 by close of trade Friday.
Despite the strong gains, the euro remains vulnerable as Spain remained at the center of worries that it will need a bailout.
Spanish Finance Minister Luis de Guindos said Friday his country still needs time to see how support from the ECB would work before the government requested anything beyond its current bank bailout.
Separately, International Monetary Fund Managing Director Christine Lagarde denied a report in a Dutch newspaper that the IMF and ECB were in discussions regarding a potential bailout for Spain.
In the coming week, investors will continue to focus on Spain's fiscal health, amid ongoing speculation over how close the debt-strapped country is to asking for a full-blown euro zone bailout.
Spain is to hold an auction of 10-year government bonds, which will be an important test of investor appetite for the country’s debt.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 17
The U.S. is to publish an index of manufacturing activity in New York state.
Tuesday, September 18
Switzerland is to release a government report containing quarterly economic forecasts for major economic indicators, such as employment and inflation.
Later in the day, the U.S. is to release official data on the current account, as well as a report on the balance of domestic and foreign investment in long-term securities.
Wednesday, September 19
The ZEW Centre for Economic Research is to release a report on Swiss economic sentiment, an important indicator of economic health.
Later Wednesday, the U.S. is to publish official data on building permits, an important indicator of future construction activity, as well as data on housing starts, a leading indicator of economic health.
The country is also to publish government data on crude oil stockpiles, as well as an industry report on existing home sales.
Thursday, September 20
Switzerland is to publish official data on the trade balance, while the U.S. is to release its weekly government report on initial jobless claims, as well as an index of manufacturing activity in Philadelphia, leading indicators of economic health.
Friday, September 21
The Swiss National Bank is to publish its quarterly bulletin, which looks at economic conditions from the bank’s perspective.