Swiss Knife

Jordan is Named SNB President Tradervox \ 8:59 AM EDT \ April 19th, 2012

Tradervox (Dublin) - The Swiss government has endorsed the Swiss National Bank Interim Chairman Thomas Jordan as the new SNB president. This announcement was given yesterday after the policy makers met to discuss the issue. The Swiss franc fell against the euro after this announcement. The decision by the Swiss policy makers has eased concerns that the SNB president would abandon the 1.20 limit cap policy that Jordan has pledged to stick with. Jordan is seen by the market as a proponent for the policy and he has indicated he is willing to do anything to protect the cap.

The policy makers meeting held in Bern announced the decision to the press causing the franc to decline the most against the euro. According to Peter Rosenstreich, a Swissquote Bank Foreign Exchange Strategist in Geneva indicated that Jordan’s ascension officially removes any doubts about the continuity of the policy. Despite the relatively weakness of the franc, the demand for the franc is still high as investors prefer the franc over the euro as risk aversion continues in the market. The continued demand for the Swiss asset will keep strengthening the franc on euro hence the SBN will have to act in the short term to avert another aggression on the imposed cap.

After the naming of Thomas Jordan as the new SNB chairman, the Franc depreciated against the euro by 0.1 percent to trade at 1.2012 per euro. It had earlier weakened the most since April 11 when it went down 0.2 percent.

Some analysts still hold the view that the franc remains expensive against the euro and raising the cap to 1.25 makes good sense. Analysts are expecting to see a raise during this quarter or in the next quarter as SNB tries to keep its policy intact.

Other people who were also appointed are Fritz Zurbruegg who is now the Head of Federal Finance Administration and Jean-Pierre Danthine who is the new Vice Chairman of the SNB.

Tradervox (Dublin) - The Canadian dollar has strengthened against the greenback after employment appreciated in April to almost six times than it had been forecasted. This has encouraged sentiments that the Bank of Canada will raise interest rates. Earlier, the currency had declined almost to three months low but after the Statistics Canada Payrolls report, the Canadian dollar increased against all the 16 most traded currencies.

According to a Chief Currency Strategist at Toronto Dominion Bank, Mr. Shaun Osborne, the report from Statistics Canada is a strong one and it will get the market talking about an interest rate increase from the Bank of Canada. The loonie was able to reverse losses it had incurred earlier in the day prior to the release of the report. The report showed that employment increased by 58,200 jobs; in March, the employment grew by 82,300 jobs which is the largest increase since September 2008. This month the unemployment rate has reduced to 7.2 percent from 7.3 percent. The market was expecting an increase of 10,000 jobs and the interest rate to remain constant at 7.3 percent.

However, the likelihood that the interest rates might go up by September diminished after reports from the US showed that employers added the least jobs n April. US is Canada’s biggest partner and any bad reports from the world’s largest economy affects the Canadian economy. Earlier, speculation of interest rate hike had surged after policy makers had indicated that the it could go up earlier than it had been planned.

The loonie increased by 0.4 percent against the greenback to trade at 99.83 cents per dollar. It had weakened earlier to by as much as 0.4 percent trading at $1.0017. The report from the Statistics Canada has given support for the loonie seeing it close the week on a high against the dollar and most other world currencies.

Fundamental Updates

SNB Grilled Over Currency Policy Tradervox \ 9:05 AM EDT \ April 6th, 2012

Tradervox (Dublin) - The euro region debt crisis has spilled over to Swiss, with the Swiss Franc breaching the Swill National Bank’s ceiling of 1.20. The Swiss Franc exceeded the cap put by SNB on September 6 for the second day yesterday prompting the SNB interim Chairman Thomas Jordan to answer questions from investors on credibility issues of the currency policy. The investors are seeking to know just how much SNB is willing to do to ensure that the policy works.

Analysts have indicated that this is the first major credibility test the SNB had to deal with regarding the currency policy. Yesterday the central insisted on its intention to do what it takes to maintain the Swiss Franc at 1.20 level. Peter Rosenstreich, the Chief Foreign Exchange Strategist at Swissquote Bank in Geneva indicated that this has acted as a wakeup call for the bank as their credibility is put on the test. The euro has weakened against major currencies due to concerns about the sovereign debt crisis.

The bullish run for the euro was sparked off by comments from the Spanish Prime Minister Mariano Rajoy who indicated that the country’s economy was in a extreme difficulty saying that the stiff budget cuts they are experiencing are better than the bailout they would get if the debt crisis were to escalate.

The Swiss Franc was trading at 1.20186 against the euro at the close of trading yesterday in London. The currency had earlier surged to as high as 1.19995. The Swiss Franc had stayed at an average of 1.2069 against the 17 nation currency since the interim Chairman Tomas Jordan took over on January 9. Economists are claiming that the current downside trend of the euro is as a result of risk aversion in the market. He said that traders are avoiding the euro adding that SNB interim chairman’s job will not be easy.

The SNB supervisory board is expected to meet on April 13 to discuss about the selection of SNB Chairman Philip Hildebrand.