USD Slides vs GBP, CHF

USD Slides vs GBP, CHF
by Korman Tam

The greenback was weaker against the British pound, falling to its lowest level in a month to 1.6676 and tumbling to its lowest level since December 2008 versus the Swiss franc at 1.0367. The US economic releases saw weekly jobless claims, which improved to 550k from 570k and the July trade deficit. The deficit figures revealed an increase in July to $31.96 billion versus the June reading at $27.49 billion.

The reports due out on Friday include July wholesale inventory, wholesale sales and the September University of Michigan consumer confidence survey. The preliminary confidence report is seen marginally lower to 65.3 from 65.7 while the current component edging up slightly to 67.0 from 66.6.

Sterling Rallies

The pound jumped to its highest level since August against the dollar at 1.6676 on the heels of the Bank of England’s monetary policy announcement earlier in the session. The BoE, as expected, held its benchmark lending rate unchanged at 0.5% and maintained its asset-purchase plan at its current level at 175 billion pounds.

Cable was initially softer just prior to the policy announcement as traders were factoring the possibility of a bump in the Bank’s asset purchase plan. When it was revealed that the BoE would stand pat, the market pushed the pound higher on hopes that the UK economy may be bottoming out and policy will likely remain unchanged for the coming months.

Interim resistance in the pair will emerge at 1.6675, followed by 1.67 and 1.6740. Subsequent ceilings are eyed at 1.6770, backed by 1.68 and 1.6830. On the downside, support starts at 1.6620, followed by 1.66 and 1.6560. Additional floors will emerge at 1.6530, backed by 1.65 and 1.6465.

Swissie Whipsaws on Intervention Fears

The Swiss franc whipsawed against the dollar and euro amid rumors that the SNB would intervene in the foreign exchange market to halt to currency’s strength. The SNB declined to comment on whether it had intervened, with traders pushing the Swissie higher from 1.0464 to its highest level since December 2008 at 1.0359.