The greenback remained weak through NY trading as sentiment was relatively stable in a lackluster session. There were no economic data releases out of the U.S., however there were several headlines and news flow. SNB Chairman Philipp Hildebrand announced his resignation today following damaged credibility after reports of his wife’s FX transactions last year surfaced. The franc initially gained following the news, however the move was only a knee-jerk reaction as the bank said it will maintain policy and stick to the floor of 1.20 in EUR/CHF. Vice President Thomas Jordan who is acting chief of the bank said the SNB will defend the limit with the ‘utmost determination’. EUR/CHF dipped briefly towards the 1.21 level and bounced to current levels of around 1.2130.
In other European news, German Chancellor Merkel met with French President Sarkozy to discuss the region’s debt crisis. The meeting lacked significant developments containing much of the usual rhetoric which saw the euro move lower initially. The common currency regained some strength on the back of firming risk appetite and a weaker buck. EUR/USD is currently trading around the 1.2775 level and we would expect to see limited action in the pair ahead of Thursday’s ECB meeting.
In Canada, November building permits showed a smaller than expected drop with a print of -3.6% m/m (cons. -5.0% and prior +11.6%). The Loonie traded slightly firmer with equities moderately higher and crude oil relatively unchanged. USD/CAD declined to current levels of around 1.0240 after an intraday test above the 1.03 figure.
Atlanta Fed President and 2012 FOMC Voter Dennis Lockhart spoke today and said that he sees ‘reluctance to change’ current Fed accommodation. He went on to say that ‘good communication’ can be a form of stimulus and noted that fourth quarter growth is likely to be ‘quite strong’. U.S. equities advanced after a choppy session with the DJIA finishing the day to the upside by about +0.26% and the S&P 500 gaining around +0.22% to close the day. Precious metals traded mixed with gold falling by about -0.44% and silver climbing by roughly +0.64% at time of writing. UST yields were mostly lower with the 10-years currently around 1.95%.
Due out of the Asia/Pacific session includes New Zealand QV house prices for December. The UK releases house price data as well with its December RICS data and Australia sees November building approvals. In Japan, weekly securities investments figures are due and in China trade balance figures are due out tonight and are expected to show a narrowing surplus to 8.8B from the prior 14.5B.
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