Last week, the Euro managed to maintain its gains despite numerous rumors that Greece will inevitably have to restructure its debt. In fact, Greece risks not getting its next tranche of financial aid from the creditors if the IMF, UE and the ECB experts, also known as the troika, decide that that the progress realized to cut the fiscal deficit is not enough. According to other rumors, Greece could be forced to accept foreign intervention in tax collection and privatization of state assets. The single currency also resisted to comments from Irish officials, which seem to indicate that a new financial aid would be necessary and the return on the market, in order to guarantee the country’s funding, won’t occur before 2013.
End of QE2 to be a turning point for Forex investors
Despite the fact that the market seems to be focused once more on the European debt and the Greek situation in particular, the end of the quantitative easing program scheduled for next month in the US will be a turning point for forex investors. This event should weigh on the Dollar as no analyst expects a rate hike before the end of the year while the Obama administration seems to be pleased with a weak Dollar.
NZD hits record high against US Dollar
Meanwhile, the NZD has once more hit a record high against the US Dollar with a level of the trade balance last seen in 1951. According to comments made by New Zealand’s Prime Minister John Key, no intervention is scheduled for the coming months since the rise of the NZD seems to be, according to him, broadly due to the weakness of the greenback.
The rise of the Swiss Franc continues
While the single currency and the US dollar are weakened by the lingering debt problem in Europe and in the US, the Swiss Franc continues its record rise without any comment or intervention from the National Bank of Swiss. The NBS is now more and more in a difficult situation and will be forced to abandon its idea of a rate hike in June. After Europe changed its monetary policy in April, many investors had anticipated the same in Switzerland, which contributed to the rise of the Swissie. Given the actual levels of the and , it seems that the NBS will wait for the decision of the American and European authorities this summer before possibly stepping in next fall.
From a technical point of view, USD/CHF parity should find support around 0.8400 this week for a rise towards 0.8710-0.8775. EUR/CHF could fall as low as 1.1980 before testing 1.2385. should remain subdued in the range of 1.4070 and 1.4402. A clear breach of 1.4400 could however pave the way for 1.4518 or even 1.7435.
This article has been prepared by Frederic Gay, CEO - Realtime Financial Technologies. Translation by C. Kodomaris