News & analysis

G10 FX has traded with a nervous tone so far this week, as yesterday’s broad dollar strength has given way to selling today, with price action following a roughly “risk on” pattern.

This two-way price action was most pronounced in USDNOK and USDSEK, which have both completed round trips of more than 1.5% in the past two days.

A few thoughts on the day’s price action and headlines:

  • Further to yesterday’s comment on CHF intervention by the Swiss National Bank, data showed that site deposits increased to a fresh all-time high last week, consistent with comments from SNB Governor Jordan’s remarks over the weekend. EURCHF continues to show interesting price action, with the 1.05150 level currently holding throughout today’s session.
  • Rishi Sunak has confirmed the extension of the UK wage furlough scheme until the end of October, with some modifications. From August onwards, the scheme will be modified to allow partial return to work for participating workers, while at the same time employers would need to begin participating in the payment of wages. The Institute of Fiscal Studies said that the total cost of a one-month increase in the duration of the program in its current form would be about £10m, bringing the total amount of payments under the scheme to £60m.
  • US financial conditions indicators have not shown a major response to the commencement of the Fed’s ETF-buying facility today. The Secondary Market Corporate Credit facility will buy both investment and non-investment grade ETFs, and was announced in March. The facility is the first underwritten by fiscal guarantees from congress’s $2 trillion initial relief package in March, $37.5 billion of which has already been invested by the US treasury in the special purpose vehicle created for the facility.
  • NZD has joined in today’s rally against the US dollar, ahead of tomorrow morning’s RBNZ Monetary Policy Statement, the first full review by the central bank since February. Of particular note will the be the central bank’s approach to negative interest rates, which Governor Adrian Orr has previously spoken favorably of, and which the large regional bank Westpac has said are likely to be implemented before the end of the year. Negative rates are something of a theme in central bank chatter this week, with two Fed speakers yesterday expressing apprehension. Bank of England Deputy Governor Ben Broadbent said they were possible in the UK, but that they had the potential to do more harm than good.


Swiss domestic banks’ sight deposits reach fresh all time highs as SNB signals commitment to blunting CHF appreciation.

EURCHF finds support – possibly from SNB – at 1.05150


Author: Ranko Berich, Head of Market Analysis



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