Daily FX Market Outlook by AceTrader-12-8-2011

Market Review – 11/08/2011 22:04 GMT

Euro, dollar surge against franc as SNB considers euro peg

The single currency and the greenback rose strongly against the Swiss franc on Thursday as the Swiss National Bank said it may peg the franc to euro to curb its strength. Usd/chf and eur/chf rallied by more than 400 points and 600 points to 0.7688 and 1.0920 respectively.

Although the single currency rallied from 1.4122 (AUS) to 1.4275 in European morning, euro then retreated sharply to 1.4104 in NY morning on active cross selling of euro vs yen and gbp. However, the pair rebounded strongly to 1.4294 on the rally of eur/chf and the U.S. stock markets. Despite euro’s retreat to 1.4182, renewed buying lifted the pair to 1.4249 in NY afternoon.  
The DJI rallied 423.37 points or 3.95% to 11143.31 whilst the FTSE 100, CAC 40, and DAX indices surged by 3.11%, 2.89%, and 3.28% respectively.  
Versus the Japanese yen, dollar rose to 77.22 in Asian morning but cross buying of yen and the decline in Asian stocks sent price lower to 76.31. Although the pair spiked above 77.00 level to 77.30 in European morning, usd/jpy dropped immediately back to 76.44 as traders said they had not seen any yen-selling intervention from Japanese authorities. Later, the greenback edged higher to 76.94 after the release of U.S. jobless claims (395K, less than forecast of 400K and the previous figure of 402K) in NY morning before stabilising.  
The British pound extended its erratic fall from Monday’s 1.6510 high to 1.6111 in Australia. However, sterling staged a strong rebound to 1.6208 in tandem with the single currency in European morning. Later, Despite cable’s retreat to 1.6118, renewed buying lifted the pair to 1.6340 ahead of NY closing.  
Data to be released on Friday include:  
Japan capacity utilisation, industrial production, EU industrial production, U.S. retail sales, U. Michigan survey, business inventories.