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SNB’s Jordan Comments Give Boost to EUR/CHF
EUR/CHF has given back gains seen following the Swiss Nation Bank President Jordan remarks. The cross popped to a high of 1.0498 only to quickly return to near net unchanged levels around 1.0465-70. SNB Chairman Jordan said that the franc remains “significantly overvalued,” and that the central bank stands ready to intervene in the FX markets if needed.
The statement was very boilerplate, made to mollify the Swiss watchmakers in a speech at an industry event, and not really warranting a sustained market impact Jordan warned last week after the bank’s quarterly policy review that it would be risky business to run long positions in the currency. EUR/CHF remains near to the half-way mark of the range that’s been seen over the last three months.
The EUR/USD has been oscillating around 1.1200, lacking downside impetus despite the stalemate in Greek negotiations with creditors. Market attention will remain on Greece, where the chances of capital controls and an exit from the euro are back on the cards. Officials are bringing such pressure to bear on Greece that they are revealing the discretionary nature of their rules. The IMF’s Lagarde, for example, has claimed that Greece will be given no grace period, but by the IMF’s rules the lack of a timely payment is not a default but rather the debtor goes into arrears for which there is a standard operating procedure. The IMF’s discretion in lending to Greece more than any other country ever based on its IMF quota is part of the problem.
This backdrop should keep the EUR/USD under pressure. The Fed’s course to tightening, which remains a possibility in September, also favors the downside. EUR/USD resistance is at Wednesday high of 1.1234 which coincides with the 20-day moving average. Supports are at 1.1150-55 and 1.1134-35.
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