The biggest impact event of 2015 so far came from Switzerland when the Swiss National Bank decided to unceremoniously renege on its commitment to defend the peg against the Euro. The decision came as a complete surprise to the currency markets prompting a large sell-off of dollars and an over 40% spike in the Swiss franc. Clearly, this had a negative impact on the central bank’s credibility and the nation’s currency is no longer regarded as a ‘safe-haven’ currency. Favour therefore lies with the dollar which is predicted to outperform the franc this year, presenting considerable long-term investment opportunities in the USD/CHF.
Investors Notes:
- The U.S. labour market has outperformed, especially in the private sector with almost 12 million jobs added post- crisis; more good news is expected this week.
- The strength of the U.S. Dollar has been confirmed by a rise in the Dollar Index off the back of better than expected GDP results for the final quarter of 2014.
- From a technical perspective, the overall market looks bullish with upward momentum in both short and long term timeframes.
- The pair has broken through a significant resistance at 0.9554 confirming strong buying pressure.
- Banc De Binary analysts predict that weakness will continue in the Swiss Franc, indicating a potential long-term upward movement in the USD/CHF.