The Swiss franc edged sharply lower against the euro Thursday morning in New York on rumors of possible SNB intervention and speculation of tax imposing on Swiss bank deposits. However, it recovered some of its losses in the course of the session.
The Swiss National Bank fixed the minimum rate at CHF 1.20 per euro on September 6, 2011. The central bank thinks this minimum rate is still high and should continue to fall over time.
Latest economic report showed that Switzerland's trade surplus fell unexpectedly in April due to a fall in exports, the Federal Customs Administration reported today.
The surplus decreased to CHF 1.33 billion in April from CHF 1.58 billion in March. The surplus was well below the consensus forecast of CHF 1.9 billion.
The Swiss franc slumped to a fresh 2-month low of 1.2078 around 9:20 am ET, moving well-off its tight-ranges since the pair revisited the 1.20 ceiling in the first week of April.
The franc recouped some of its losses and is presently hovering around the 1.2040 level with 1.2085 seen as the next likely target level.
Germany's business confidence declined more than expected in May, reports said today citing the latest survey results from Ifo Institute.
The Ifo business climate index fell to 106.9 in May from 109.9 in April. Reports said that this was the first fall since October last year. Economists had forecast the index to drop to 109.4.
The franc also lost ground against the British sterling, falling to an 8-day low of low of 1.5060 around 9:25 am ET. If the franc weakens further, 1.5110 is seen as the next probable support level.
The U.K. economy fell into a double-dip recession at a faster than estimated pace during the first quarter due to a sharp revision to construction.
Gross domestic product shrank 0.3 percent from a quarter ago, slightly bigger than the previously estimated drop of 0.2 percent, second estimates published by the Office for National Statistics revealed today.
The alpine currency was rather unmoved against the dollar and the yen, hovering at 0.9575 and 83.0, respectively. As of 9:50 am ET, the Swiss franc was trading at 82.98 against the yen and 0.9574 against the greenback.
The Bank of Japan said that Japan's economy is shifting toward a pick-up phase, although its economic activity has remained more or less flat.
In the monthly report, the BoJ said that domestic corporate goods prices will rise at a slower pace, reflecting slowdown in global commodity prices. The annual increase in consumer prices is forecast to remain at around zero percent for the time being.
Looking forward, the central bank expects the economy to return to a moderate recovery path as the pace of recovery in overseas economies picks up, driven by commodity-exporting countries and reconstruction activity after the earthquake.
The US Department of Commerce released a report showing a modest increase of 0.2 percent in durable goods orders in April after tumbling by 3.7 percent in March. The steep drop reported for March reflected a revision from the 4.2 percent decrease that had been reported previously.
Meanwhile, initial claims for U.S. unemployment insurance dipped in the week ended May 19th after revised figures showed a higher number of claims in the previous week.
According to the Labor Department, new unemployment claims came in at a seasonally adjusted level of 370,000, a slight decline from the previous week's revised level of 372,000.
by RTT Staff Writer
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