Swiss Franc Falls On Trade Optimism

The Swiss franc declined against its major counterparts in the European session on Monday, as hopes of the U.S. and China finalizing “phase one” trade deal underpinned risk sentiment.

The Office of the U.S. Trade Representative said in a statement that the countries have “made headway on specific issues and the two sides are close to finalizing some sections of the agreement.”

On Saturday, China’s Commerce Ministry said both sides are “close to finalizing” some parts of a trade agreement after high-level telephone discussions on Friday.

U.S. President Donald Trump said he hopes to sign the deal with China’s President Xi Jinping next month at a summit in Chile.

On the Brexit front, the European Union has agreed for a Brexit extension until January 31, 2020, removing the risk of a damaging no-deal split on Thursday.

The currency showed mixed trading against its major counterparts in the previous session. While it was steady against the pound and the yen, it dropped against the greenback and the euro.

The franc dropped to near a 2-week low of 109.14 against the yen, from a high of 109.38 hit at 5:00 pm ET. The franc is seen finding support around the 108.00 region.

Data from the Bank of Japan showed that Japan producer prices rose 0.5 percent on year in September – in line with expectations and unchanged from the August reading following a downward revision from 0.6 percent.

On a monthly basis, producer prices were flat following the 0.1 percent decline in the previous month.

The Swiss currency depreciated to 0.9970 against the greenback, its weakest since October 16. The next likely support for the franc is seen around the 1.01 level.

The franc that ended Friday’s trading at 1.1017 against the euro fell to near a 2-week low of 1.1057. On the downside, 1.13 is possibly seen as the next support level for the franc.

Data from Destatis showed that German import prices decreased at a slower than expected pace in September.

Import prices dropped 2.5 percent year-on-year in September, following a 2.7 percent fall in August. This was slower than the 3 percent decline economists had expected.

After rising to 1.2739 against the pound at 5:00 pm ET, the franc eased off to a 4-day low of 1.2809. The franc is poised to challenge support around the 1.31 level. The latest Distributive Trends Survey from the Confederation of British Industry showed that the UK retail sales volume declined for the sixth consecutive month in October and retailers’ stock levels in relation to expected sales reached a record high.

The retail sales balance fell to -10 percent in October. Retailers expect sales volume to rise marginally next month with a balance of 1 percent forecasting sales growth.

The material has been provided by InstaForex Company –