Fundamental Analysis:

The Switz Franc remained unchanged against the green back in last week’s trading session after the SNB announced that it would eliminate some groups of sight deposit account holders from the exemption from negative interest, i .e. more accounts would be subject to negative interest rates. As noted in the statement negative interest will now also apply to the sight deposit accounts held at the SNB by enterprises associated with the Confederation, including PUBLICA, the pension fund of the Confederation.

The affected account holders will be accorded the minimum exemption threshold of CHF 10M, to which negative interest does not apply. The only sight deposit accounts to be exempt from negative interest will be those of the central Federal Administration and the compensation funds for old age and survivors’ insurance, disability insurance and the fund for loss of earned income (AHV/AVS; IV/AI; EO/APG). We believed the move signals that SNB is not satisfied with existing monetary policy in driving capital away from Swiss franc.


Technical Analysis:

The pair trieded to rebound again last week but was limited well below 0.9862 resistance. Initial bias stays neutral this week first and fall from 0.0127 is expected to resume later with 21 EMA crossed below 55 EMA. Break of 0.9471 will target 100% projection of 1..0127 to 0.9471 from 0.9862 at 0.9206. Meanwhile, break of 0.9862 will argue that such correction is finished and will turn bias back to the upside for retesting 1.0239 high.


In the week ahead investors will be looking to Wednesday’s Fed statement for clues on the possible timing of a rate increase. Investors will also be focusing on Wednesday’s preliminary reading on U.S. first quarter growth as well as reports on inflation, consumer confidence and manufacturing.


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