The Swiss franc extended its losses on Wednesday as escalating Iranian attacks on shipping tankers in the Strait of Hormuz are threatening to disrupt a delicate recovery in Persian Gulf oil follow.
Swiss inflation has accelerated to a two-year high in September, driven primarily by climbing global oil prices and a weaker Swiss franc. Despite so, the reading remains remarkably lower than that of the rest of Europe.
Renewable energy accounts for roughly 80% of the country's total electricity usage. Therefore, rising fossil fuel costs due to the war in Iran has limited impacts on its inflation.
The SNB has softened its stance on currency intervention after months of franc depreciation. Most economists do not expect the policymakers to join the global tightening cycle.
Historically, when geopolitical risks directly impact energy commodity markets and US security interests, global capital often flows directly into the greenback instead of the franc.
Treasurys are offering strong value following a major spike that pushed borrowing costs to multi-year highs, according to PIMCO. Ten- and 30-year yields hit fresh 24-year highs earlier this week.
EBC Financial Group analyst said the franc exhibited a classic evening star reversal pattern. That indicated that the buyers ran out of steam, with potential support seen around 0.8360 per dollar.
Asset Recap
As of market close on 6 October, among EBC major products, Applied Optoelectronics shares led gain after it completed its $600 million at-the-market equity offering programme.
The semiconductor test equipment sector has seen severe profit-taking waves following a year of massive gains. That took a heavy toll on Aehr Test Systems ahead of its earnings date.
The UK is facing a precarious financial situation ahead of its upcoming Autumn Budget, according to a former chief economist of the BOE. But Amundi has taken a more positive view on sterling in the past month.
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