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The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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Euro Might Be Queued Next For Currency War Gains

If the Bank of Japan has marked the start of currency wars, then the EURCHF is worth watching.

The pair fell below parity in late-June and has since slumped to 0.9640.

EURCHF-Daily Chart

The Swiss National Bank has previously intervened in the market when it lifted the peg of the EURCHF. That led to a crash in the pair below the 1.00 level. However, the pair is trading lower than in those days, and it may be the European Central Bank that wants to avert a further slide in the euro.

The Swiss National Bank just raised interest rates to 0.75% as it brings its negative interest rate era to an end. Markets were expecting a 1% increase and the franc sold off.

Inflation in Switzerland is only 3.5% YoY, and that is much lower than in the Eurozone, where inflation is around 9%, and in the UK, it is nearer 10%. As part of central banks' plans to lower rampant inflation, they need a strong currency to lower the cost of imports such as energy.

The euro still has an advantage over the franc because the SNB move still didn’t act as aggressively as expected. The currency dropped over 2% against the single currency. That could signal a potential reprieve for the euro with a possible bottom at these levels.

The next target could be a move back towards the 1.00 level in EURCHF, but that would need further action from the ECB. Some officials from the European Central Bank have asked for more rate hikes, but they are still lagging behind the likes of the US.

If the euro were to fall further, then the bank would likely start to assess intervention, with that being verbal at first. That could add to the bounce in the single currency. Next week will see German data dominating the market with IFO Business Climate, consumer confidence, and inflation numbers released throughout the week.

Last Updated: 23/09/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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