Earlier today, the Swiss National Bank surprised FX markets by dropping its 3-year long cap against the Euro, resulting in an initial 30% surge in the Swiss Franc’s value. Some economists are saying that the SNB’s move is a risky one, given that the intent, albeit temporary, was meant to protect Switzerland’s economy, Last month, the SNB had said it needed to defend the cap as growing worries about the Eurozone’s economy and the crisis in Russia sent investors flocking to the Swiss Franc as their safe haven currency choice.
With the 1:20 Swiss Francs cap a thing of the past, the Swiss Franc quickly appreciated. As reported at 10:26 a.m. (GMT) in London the EUR/CHF was trading lower at 1.0292 Swiss Francs, a loss of 14.29% and recovering from the earlier session low of 1.0155 Swiss Francs, a likely knee jerk reaction to the SNB surprise. The USD/CHF was also lower at 0.8798 Swiss Francs.
Dollar Pressured by Disappointing Data
In the United States, a disappointment in the recently released retail sales figures put the greenback under pressure; retail sales hit an 11-month low for December, and that resulted in investors speculating that the Federal Reserve might push back its plans to raise interest rates later this year. In somewhat volatile trading, the EUR/USD pair was trading at $1.1728, below the midway point of the pair’s range between the session low of $1.1571 and peak of $1.1790.