KEY CURRENCIES FALL TO YEAR LOWS
The Swiss Franc fell by as much as 0.64% following a report from the Federal Statistical Office (FSO) that showed the trade balance declined by 2.09 billion francs compared to the estimated 2.78 billion. The dollar peaked against the franc in January 2017 before starting a downward trend that saw it reach a multiyear low of 0.9189 this January. The country’s trade balance has deteriorated since February last year when it reached more than 4.8 billion CHF.
The Australian dollar fell by about 0.25% against the dollar to trade at 0.7896. This happened after the Reserve Bank of Australia released its minutes for their previous meeting. The minutes showed that while officials were optimistic about the country’s economy and the general growth of the global economy, they remained fearful about the rising level of mortgage debt. According to the minutes, the bank will start hiking rates provided that wages continue to grow.
The Euro slid against the dollar falling by as much as 0.59%. This came as the dollar index soared by as much as 60 basis points. The surge on the dollar was as a result of increasing volatility, which led to higher treasury bonds. The U.S 10-year is currently trading at 2.09% while the 30 year is trading at 3.154%. The euro fell against the dollar, the yen, and the pound even as data from Germany showed that ZEW economic sentiment improved to17.8 beating analysts’ forecast of 16.5.
From its weekly low of 0.9187, the USD/CHF pair has had a Fibonacci Retracement of 88.6% to trade at the 0.9348 level. In this surge, the pair has managed to recover most of its downward losses as it aims to rise to a weekly high of 0.9373. The disappointing data from Switzerland, coupled with rising yields in the United States could lead the pair to trade above the 0.9373 level.
On 8 February, the pair fell to a multi-monthly low of 0.7758. Since then, the pair has been trying to recover some of the lost gains, by retracing more than 50%. It is currently trading at the 38.2% retracement level. The minutes from the RBA could put more pressure to the Australian dollar. This will be more so because volatility seems to be coming and treasury yields in the US going up.
The EUR/USD pair crossed the important support level of 1.2381. It is now trading at 1.2346, which is an important Fibonacci Retracement level. With the longer-term moving average (in red) further from the short-term MA, there is a likelihood that the pair could try to test the 70.7% Fibonacci level at 1.2307.