There was no data on hand from the Euro-zone and as usual, we saw that EUR/USD price action was dictated by the greenback.
The pair saw a range of over 200 points on Thursday, but ended the day near the bottom just above 1.4300. As we mentioned in the US dollar section, [B]if we see investor sentiment improve slightly on Friday, the dollar could actually end the week on a strong note and weigh EUR/USD down.[/B] Meanwhile, the Swiss National Bank (SNB) left the target range for Swiss franc three-month Libor unchanged at 2.25-3.25 percent, and the Bank said that they intend to hold the rate in the middle of the target range for the time being. Referencing the recent financial instability, the SNB suggested that no rate cut was needed since they were continuing their “generous and flexible provision of liquidity” to the markets. In fact, it is clear that the SNB was previously inclined to increase rates, as they said that the prospect of easing inflation allowed them to leave rates steady. Overall, we see that Credit Suisse overnight index swaps are pricing in no change in rates by the SNB over the next 12 months, which is similar to what we have with the Japanese yen and the Bank of Japan. Thus, [B]risk trends remain the dominant driver of the Swiss franc (and the Japanese yen), as fundamentals rarely have a lasting impact on the currencies. [/B]
[B]Related Articles[/B]: Euro Interest Rate Forecast, Swiss Franc Interest Rate Outlook
[B]
Check out Daily Fundamentals in its entirety for analysis and outlooks on the US dollar, euro, British pound, Japanese yen, and the commodity dollars.[/B]