January 16, 2015, 09:00 GMT Top headlines: • The SNB shocked the markets yesterday by ending the Swiss Franc’s peg to the euro at 1.20 EUR/CHF • EUR/CHF below parity for the first time in history; the pair’s volatility at levels not seen since the 70’s • Safe-haven demand boosts the yen and gold prices • Later today: US and Eurozone December’s CPI OVERVIEW: The FX market faced one of its biggest shocks in years yesterday. The Swiss National Bank surprised the markets with the announcement that it was abandoning its three-year policy of holding up a floor on EUR/CHF at 1.20. The pair’s volatility jumped to the highest level since 1971, as the Swiss Franc skyrocketed broadly. The single currency plummeted as traders are drawing the conclusion that Swiss officials are very concerned about a more substantial stimulus program coming from the European Central Bank in the near future. Meanwhile, the safe-haven Japanese yen advanced over a basket of major currencies and gold prices jumped to five-months high as the markets shiver. Later today, December’s CPI figures are expected for both the Eurozone and the US, although the volatility is likely to remain low as traders are still digesting the developments of the last 24 hours. EUR/CHF: The Swiss National Bank have surprised markets yesterday with the announcement of the end of Swiss Franc’s peg to the euro at 1.20 EUR/CHF. Moreover, the SNB lowered the benchmark deposit rate to -0.75%. The Swiss franc skyrocket over the euro immediately after the sudden announcement. EUR/CHF 24-hour realized volatility jumped to the highest level since at least 1971. The pair broke below parity for the first time in history free falling at 0.9669 from a high of 1.2009. Traders are seeing signals that Swiss officials are very concerned about a more substantial stimulus program coming from the European Central Bank in their next meeting at January 22. The pair is currently conciliates at 1.0176. USD/CHF: The US dollar free fell to its lowest in more than four years over the Swiss franc yesterday. The SNB unexpected announcement weighed on the dollar. The pair hit a low of 0.8299 from a high of 1.0219 and it is currently trading at 0.8712. EUR/USD: The euro depreciated over its American counterpart on the SNB news. The pair closed Thursday at 1.1628 after hovering between 1.1792 and 1.1565. Earlier today, the German inflation releases left the EUR/USD flatlined. German consumer prices advancing 0.2% on a yearly basis as expected and the HICP also met expectations, rising 0.1% in both YoY and MoM basis. Ahead in the European session, the US as well as the Eurozone are releasing their CPI data for December. The US core CPI reading is seen registering at 1.7%, unchanged from November. The Eurozone inflation is expected to decline to -0.2% from last month’s 0.3% on a yearly basis, pushing the euro area into deflation. USD/JPY: The Japanese yen was boosted on Thursday on a safe-haven demand. The pair closed at 116.14 after hitting 117.93 and touched a fresh one-month low 115.84 earlier in Asia. Currently USD/JPY is trading flat at 116.43. XAU/USD: The dramatic volatility from the Swiss franc drove investors to the safety of gold. The precious metal’s prices advanced at a five-month high yesterday touching a high of $1266.59 per ounce from a low of $1225.89 per ounce. The yellow metal is currently trading at $1258.84 per ounce. News to Watch CURRENCY TIME (GMT) INDICATOR FORECAST PREVIOUS EUR 10:00 Consumer Price Index – Core (YoY) (Dec) 0.8% 0.7% EUR 10:00 Consumer Price Index (MoM) (Dec) -0.1% -0.2% EUR 10:00 Consumer Price Index (YoY) (Dec) -0.2% 0.3% USD 13:30 Consumer Price Index (YoY) (Dec) -0.7% 1.3% USD 13:30 Consumer Price Index (MoM) (Dec) -0.4% -0.3% USD 13:30 Consumer Price Index Ex Food & Energy (MoM) (Dec) 0.1% 0.1% USD 13:30 Consumer Price Index Ex Food & Energy (YoY) (Dec) 1.7% 1.7% USD 14:15 Industrial Production (MoM) (Dec) 0.0% 1.3% Disclaimer: MPF Global Markets Ltd research reports and analytics are provided to you for informative purposes only and they can in no way be considered as a recommendation or advice by MPFGM to you to engage in any trade. MPF Global Markets Ltd shall therefore not be held responsible for any outcome of your trading decisions in regards with these reports or similar reports. You hereby acknowledge that using the information detailed in these reports is at your sole responsibility and you will have no claims with regards to these reports against MPF Global Markets Ltd. If you do not agree to this, you are strongly advised not to use these reports.
Posted on: Fri, 16 Jan 2015 09:33:16 +0000
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