Swiss Franc Appreciates Amid Risk Aversion
The Swiss franc climbed against its major opponents during the
European session on Friday amid risk aversion, as investors fret
about a spike in bond yields and stretched valuation.
European shares fell following a sell-off in Asia, led by the
overnight surge in yields amid inflation worries.
The benchmark 10-year Treasury yield soared above 1.6 percent
after soft demand at an auction of $62 billion of 7-year Treasury
Investors worry that higher inflation could force the central
banks to pare back ultra-loose policies, despite their dovish
Data from the State Secretariat for Economic Affairs showed that
Switzerland's economic growth eased sharply in the fourth quarter
as the restrictions imposed to contain the coronavirus pandemic
weighed heavily on the service sector.
Gross domestic product gained 0.3 percent sequentially, much
slower than the 7.6 percent expansion seen in the third quarter.
GDP was forecast to climb 0.1 percent.
The franc moved up to a 3-day high of 1.0956 against the euro
and a 4-day high of 1.2576 against the pound, up from yesterday's
closing values of 1.1012 and 1.2663, respectively. The franc is
seen finding resistance around 1.08 against the euro and 1.24
against the pound.
The franc reached as high as 0.9027 against the greenback,
setting a 3-day high. The franc is likely to face resistance around
the 0.88 region, if it gains again.
The Swiss currency touched a 4-day high of 117.79 against the
yen, compared to yesterday's closing quote of 117.26. Next key
resistance for the franc is likely seen around the 119.5 level.
Data from the Ministry of Land, Infrastructure, Transport and
Tourism showed that Japan's housing starts continued to decline in
January, albeit at a softer pace.
Housing starts declined 3.1 percent year-on-year in January,
following 9.0 percent fall in December. Economists had expected
decrease of 2.5 percent.
Looking ahead, Canada industrial product price index, U.S.
personal income and spending data, wholesale inventories and
advance goods trade balance, all for January, and University of
Michigan's final consumer sentiment index for February will be
featured in the New York session.