Thursday, December 18, 2014

USD/CHF up above 0.98 on Negative Rates

Switzerland’s franc weakened the most in 18 months versus the euro after the nation’s central bank introduced negative interest rates to defend the currency’s cap.

The shared currency fell for a second day against the dollar as the Swiss National Bank decision boosted speculation the European Central Bank will expand stimulus measures next year. A gauge of the dollar reached a five-year high amid signals the Federal Reserve’s pledge to be “patient” on interest rates means an increase next year. Colombia’s peso gained for a third day to lead most of its emerging-market peers higher. The pound gained as volatility rose to a 15-month high.

Switzerland’s move was a “telltale sign that the SNB is cautious because of the ECB,” said David Song, a New York-based currency analyst at FXCM Inc. “The SNB is going to follow along with the ECB in terms of the easing cycle.”

Bloomberg

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