The EUR/CHF gave back 94 points as the pair continued to regulate itself and find a trading range after the SNB pulled the plug on the 120 peg and also moved to negative interest rates. The euro continued to fall ahead of the ECB meeting on Thursday. ECB President Mario Draghi, who defused the turmoil in 2012, is trying to craft the cross-border consensus needed for full-blown quantitative easing as the threat of deflation hovers over the region and governments resist overtures to do more.
“The politics of Europe is so much more problematic even though the economics look better,” says Ian Bremmer, founder and president of the New York-based Eurasia Group. “Everywhere you look politically, bottom up, inside out, outside in, Europe is bad this year.”
The first of this year’s election battles will be in Greece, the euro-zone’s original problem child. Voting takes place Jan. 25 with Syriza leading in opinion polls after five years of fiscal austerity and with unemployment still north of 25 percent. The party is pledging to ease the budget squeeze on which international aid depends and seek a write-down on some of the country’s debt.
The SNB is unlike other central banks because it is not in fact owned by the Swiss government but is a listed company with shareholders that include Swiss administrative regions, know as cantons, as well other public bodies and private individuals. What is important is that the SNB has a fiduciary duty to its shareholders — that is, a responsibility to act in their best interest. And here we may start to understand the pressures that the bank was under. With ECB stimulus about to happen, the SNB was forced to look at its responsibilities.
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.
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