INVESTICA LTD
Understanding Markets
Daily market newsletter: 4th July 2006
Underlying Swiss
demand
The Swiss growth
trends remain encouraging and the National Bank will continue on the
path of gradual monetary tightening and this will lessen the risk of
substantial selling pressure on the franc. Overall, the dollar is
likely to hit selling pressure around 1.2350 with near-term support
close to 1.22.
The Swiss franc
pushed to highs around 1.2215 against the dollar on Monday before
correcting slightly to 1.2230 and the dollar was still on the defensive
in early Europe on Tuesday in cautious trading.
The Swiss PMI index
remained strong in June with an increase to 64.0 from 63.5 in May,
maintaining the impressive run during 2006. The data will keep the
National Bank firmly on track for a further interest rate increase in
September.
Emerging-market
currencies continued to regain ground on Monday as risk aversion levels
surrounding higher US interest rates faded. The easing of global
tensions will lessen short-term Swiss franc demand, although selling
pressure on the franc should be limited and stresses are liable to
return within the next few weeks.
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