SNB Chief Jordan Vows to Defend Ceiling

EUR/USD fell for the second day as investors took a cautious stance ahead of Spanish and French bond auctions.

Concerns that the country will be unable to finance its debt were tempered after it sold more 12-month and 18-month bills than expected on Tuesday.

Eurogroup chief Jean-Claude Juncker said that Spain is on the path of implementing the reforms, and in doing so it won’t need any sort of additional financial support from the eurozone.

Spain is issuing as much as €2.5 billion in 2-year and 10-year bonds, while France plans to sell as much as €8 billion of bonds maturing in September 2014, April 2015 and February 2017, in addition to as much as €3 billion euros in inflation-linked securities maturing in July 2018.

Swiss National Bank (SNB) President Thomas Jordan said the franc remains overvalued and pledged to defend a cap of €1.20 that is vital for the country’s economy. “The franc limit is absolutely necessary in the current situation. The entire governing board is fully behind this limit, which we continue to defend regardless of what happens in the financial markets.” Jordan said. He said “The euro crisis isn’t over yet. We have not just the Greek problem, but in general the refinancing possibilities of the bigger countries like Italy and Spain. As long as refinancing isn’t secured, shocks will continue to occur in the financial markets”.

On the other side of the Atlantic, the Bank of Canada left key rates unchanged, but its commentary surprised some when it indicated that some withdrawal of stimulus “may become appropriate”, thereby hinting at a possible policy tightening in the near future.

Canadian currency fell sharply in the forex market after the official statement. USD/CAD has been struggling to pass 1.0050 level and has been mostly bearish for the last couple of months.

BoC Governor Mark Carney said “In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate. The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments”.

The Asian stock markets opened slightly lower today. NIKKEI started the day at 9,578.68, previous close was 9,667.26. HANG SENG opened at 20,767.46, previous close was 20,780.73.

EUR/USD is trading at 1.3117 by the time of typing and for today resistances are located at 1.3156 and 1.3238. Support levels are 1.3106 and 1.3023.

GBP/USD is at 1.6025. Resistance levels are located at 1.6060 and 1.6100. Supports are located at 1.5984 and 1.5928.

USD/CHF is trading at 0.9162 by the time of typing and for today resistances are located at 0.9196 and 0.9235. Support levels are 0.9130 and 0.9063.

AUD/USD is trading at 1.0365. Resistances are located at 1.0401 and 1.0447. Support levels are 1.0325 and 1.0294.



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