THE TIPSTER
WITH fractures appearing in the Eurozone’s plans for a unified bond and the US making overtures for further rounds of quantitative easing, traders have been left hunting out safer plays for their money. As such, the Swiss franc is back in favour and the dollar’s drive back towards parity has been short lived. There’s no end of big macroeconomic stories rolling around at the moment and with the Christmas break approaching, the focus could well be on further reducing risk. IG Index offers a spread on dollar-Swiss franc of $0.9767-$0.9771.
Traders should watch out though. Sterling-Swiss franc looks to have reversed its recent trend and could make a run back towards the SFr1.6000 area after forming two highs around the level, one in October and the other in November, formally known as a “double top”. With two days of strong gains under its belt and back above the 1.5500 mark, sterling might have another go at testing 1.6000. Capital Spreads quotes SFr1.5538-SFr1.5546 for sterling-Swiss franc.
The much discussed euro recovery of late last week has failed to really materialize or even to keep a foothold. In fact, it hasn’t managed to hold on to its gains above key resistance levels against the dollar. Most likely, the rally was a reaction to an oversold market and to poor non-farm payroll data in the US. With fears about the single currency still simmering below the surface, the risk of a renewed sell off is a very real and likely prospect.
There were various attempts to buy euros and drive it higher yesterday morning, and the soothing words of some European finance ministers helped a little, but $1.3400 seemed to cap any upside intraday. Ultimately, the $1.2980 key support area from earlier this month could well be a target. ETX Capital quotes a fixed two pip price for euro-dollar of $1.3374-$1.3376.