Franc Dived as SNB Ready to Intervene - 7.11.2011

US Dollar The dollar appreciated against its major counterparts in Asian trading hours today, except the yen, while stock markets began this week with a relatively poor performance. Japanese Nikkei Stock Average lost almost 0.4% by the end of the trading session. In the US unemployment rate unexpectedly fell in October, despite companies hired less workers than economists initially expected. According to the Labor Department, the jobless rate dropped to 9% from 9.1%, while the number of payrolls increased by 80000, following a revised 102000 gain in the previous month. The labor market data however goes in line with the Federal Reserve Chairman Ben Bernanke’s prediction of a “frustratingly slow” recovery. The dollar index, which tracks the unit against a set of six currencies of the major US trading partners, consolidated last week close to the level 77.00, after falling to 74.72. Euro The euro weakened today against the dollar and the yen, but strengthened against the Swiss franc. The single currency failed to consolidate gains amid a continuing uncertainty in the euro region, as Italian Prime Minister Silvio Berlusconi faces a key parliamentary vote tomorrow and Greece plans to form a national unity government, as Bloomberg informed. Greek Prime Minister George Papandreou agreed with the leader of the main opposition party, Antonis Samaras, to “form a new government with the aim of leading the country to elections immediately after the implementation of European Council decisions on October 26,” according to the Greek president’s administration statement. Papandreou in its turn said he won’t lead the new government. At the same time European finance chiefs will continue today the discussions of how to increase the firepower of the European Financial Stability Facility to 1 trillion euros. A detailed and clear plan is required to send to the whole world a “message of confidence” and to convince global leaders that Europe has enough political will to protect Italy and probably Spain from the spreading debt crisis. The yield on Italian 10-year bonds meanwhile is still staying above 6% after climbing to 6.4% on November 4, while equal German debt costs just 1.86%. The single currency fell against the US dollar by the end of Asian trading session from 1.3818 to 1.3752. Swiss Franc The franc depreciated against the dollar and the euro after the central bank showed its readiness to take more action if the currency’s strength threatens Switzerland’s economy. The governor of the Swiss National Bank, Philipp Hildebrand, said in an interview with NZZ am Sonntag newspaper that the currency is expected to “depreciate further”. He also added that the central bank “monitors the data and would take further measures if needed.” As soon as today reports may show that unemployment rate in Switzerland increased in October from 2.8% to 2.9%, while annualized CPI growth rate may drop in the same period to 0.2% from 0.5%. The greenback rallied against the franc to 0.8940 from Friday’s close at 0.8781, and the euro rocketed to 1.2308 from 1.2127 on Friday.