THE euro was dropping steadily against the dollar yesterday morning, tumbling some 150 basis points before stabilising around $1.3530.
Then, a statement released across the wires stated European Central Bank (ECB) member Yves Mersch said the ECB may toughen inflation language next week, and may warn of upside inflation risks.
This hawkish tone sent euro-dollar shooting right up to resistance at $1.3640 again. With the Middle East unrest continuing though selling rallies, this seems the best course of action. Spread Co offer a spread on euro-dollar is $1.36421-$1.36429.
All eyes will be on the safe haven currencies as the situation in the Middle East appears to be getting more heated with every day.
The Swiss Franc has naturally risen against all other currencies and this could continue as long as the situation remains tense. The New Zealand dollar has been hit since an earthquake in Christchurch killed 65 people.
The Kiwi dollar already slid 2.4 per cent against the Swiss franc, and based on the overall situation there could be potential for this trend to go on. Capital Spreads quotes SFr0.7052-SFr0.7059 on New Zealand dollar-Swiss franc.
The Swiss franc’s appeal as a safe haven in times of geopolitical uncertainty combined with Japan’s recent downgrade by the Moody’s ratings agency has made the Swiss franc-yen pair an interesting trade in recent days.
A break above ¥90.00 on the pair would be seen as significant by many because this would pave the way for a return to the 2008 highs above ¥100.
So long as the uncertainty in North Africa and the Middle East remains an open-ended proposition then the Swiss franc is unlikely to be short of fans. The current IG Index price on dollar-yen is ¥88.406-¥88.431.