NEW YORK: The Swiss franc dominated trade on major currency markets again on Thursday, weakening against the euro and the U.S. dollar on renewed speculation of intervention by the Swiss National Bank, while commodity-based currencies fell against the greenback.
The euro gained broadly, even in the face of Greek political ructions with the European Union, although the dominant theme of U.S. dollar strength is taking all but a pause.
"Despite all the uncertainties related to Greece, the euro is trading resiliently off the recent low," said Alan Ruskin, global head of currency strategy at Deutsche Bank in New York.
In mid-morning New York trade, the euro strengthened to 1.0451 Swiss francs, up 2.30 percent on the EBS trading platform. This is by far its strongest since the SNB triggered the most violent move in a major currency in four decades by scrapping its cap on the franc two weeks ago.
The dollar rose 1.45 percent to 0.9183 franc. The euro gained 0.40 percent to $1.13325.
One trader speculated the SNB was also intervening in favor of the dollar, a shift which may allow it to battle the franc's broad strength at less overall cost.
"Nobody actually knows that they are intervening, but the interesting thing is that everyone now expects them to use a basket rather than just the euro," said a senior trader with one international bank in London.
Morgan Stanley's head of European FX strategy, Ian Stannard, said he believed the Swiss were moving to a "dirty float" where they will intervene regularly under a framework built around a basket of currencies including the dollar, euro and others.
He forecast the franc to weaken to 1.02 per dollar by the end of the year and the euro to 1.07.
The Australian and New Zealand dollars fell, suffering from expectations interest rates in both antipodean economies will have to be eased to deal with poorer growth elsewhere.
The kiwi traded at $0.7285, down 0.4 percent on the day, having hit a four-year low of $0.7263. The Aussie sank almost 1.5 percent to a 5-1/2-year low of $0.7763.
Denmark's central bank cut interest rates on Thursday to a record low of -0.5 percent in an effort to ward off upward pressure on the currency. The crown weakened to 7.4434 per euro before recovering to trade at 7.4444.
This was Denmark's third rate cut in two weeks, made broadly in response to the European Central Bank's decision to launch one trillion euros' worth of monetary stimulus.
Comments
Comments are closed for this article.