As governments became more concerned about the markets conditions, both the Swiss National Bank and Bank of Japan intervened yesterday and early this morning in an attempt to put an end to the rising value of their currencies which is damaging their exports and their economic recovery.
The Swiss National Bank cut the interest near zero yesterday and expanded the banks’ deposits to 80 billion CHF. Meanwhile BoJ spent 1 trillion yen ($13 billion) to sell the yen and might pump some extra liquidity into the markets, since they pledged to ease the monetary policy further.
The yen fell sharply today against the USD, and the pair recorded the highest of 80.00 from the lowest of 76.96, while the USD/CHF pair reached the highest of 0.7799 this morning. However as pessimism about the global economic growth persists, these downside movement may be short lived.
Now the Feds are expected to adopt a third round of quantitative easing as the economy is on the verge of falling into recession, while the European Central Bank may be put under pressures to buy more bonds to ease the credit crisis that seams to have no resolution.
Today the ECB and BoE will hold their monetary policy meetings, and neither is expected to rise the interest rate, however both economies still face difficult circumstances, therefore BoE might continue to be dovish, while Trichet will continue to face difficult questions during his press conference later today.
These decision coupled with the labor data from the U.S. today and tomorrow, caution, volatility and swift movements will persist. Concerns about the faltering U.S. economic recovery are still prevailing, especially after the U.S. released more disappointing data yesterday via the ISM services and factory orders reports.
Today the U.S. will release the weekly jobless claims and tomorrow the non-farm unemployment report will be on schedule. Till then investors will take all their precautions and demand on safe haven may continue. Thereby the U.S. dollar rose sharply today reaching the highest of 74.82.
Oil fell towards the $91.50 level as questions about demand continue to be asked since growth is jeopardized. Gold is consolidating around the $1663.00 level, while the euro fell to the lowest of 1.4210 and the pound fell to the lowest of 1.6330 ahead of the monetary policy meetings.