Negative Interest Rate
According to Reuters, SNB was not happy about the negative interest rate of – 0.75% it charges the banks who park money with it overnight. The SNB has no alternative to ultra-expansive monetary policy, while the virus crisis has created a great appreciation pressure on safe Francs, SNB Chair Thomas Jordan said in an interview session with the Sonntags Zeitung newspaper.
The -0.75% SNB negative interest rate is the lowest interest rate in the world at the moment, after the BOJ -0.10%. The Franc has become its main attraction as a safe asset with a stable political climate and has not changed much. The SNB has taken this route while maintaining negative interest rates to avoid more difficult circumstances. The SNB also increased foreign currency purchases to reduce Franc increases. Deposits in the central bank, that are seen as a proxy for SNB intervention, have increased by almost 77 billion francs this year, while the CHF has risen to the highest level against the EUR, since July 2015.
USDCHF
Last week’s USDCHF bounced, but was confined under Resistance as well as the 0.9800 round number. Bias still looks neutral for this week in a fairly wide sideways range of 200 pips. Breaking the 0.9680 minor Support will turn the bias to the downside with next Support at 0.9588 and the low price of 0.9500. A break of 0.9800 will target testing at the price of 0.9900.
In the daily period, higher prices are being formed that are lower than before and the impression from price projections is narrower in the formation of triangle patterns. The 200-DMA has become a dynamic Resistance that has been retested 3 times, while the RSI is at the 50 center line and MACD’s histogram line up above the neutral level of the MACD.
In the 4-hour period, the 0.9800 area implies a stronger Resistance level than the lower Support level. However the MA’s slope in the middle of the consolidation zone occurred for the past 7 weeks. More indications to the negative side at 4-hour chart, with RSI entering a downward bias at 44 and MACD histogram approaching 0 zone.
Click here to access the HotForex Economic Calendar
Don’t forget to join our free webinar at:
https://www.hfmtrading.com/sv/id/trading-tools/trading-webinars.html?webinar_lang=id#webinars
Ady Phangestu
Market Analyst – HF Educational Office – Indonesia
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
