As the last trading day of the year commences, the CHF is the strongest and the AUD is the weakest. The USDCHF is trading at the lowest level since 2015. The EURCHF is at the lowest level since at least 1972 this week
The SNB sold foreign currency worth around $45 billion in the 3rd quarter of the year, marking its second-largest forex sale since 2020. This move comes as part of the SNB's efforts to increase the value of the Swiss franc to mitigate imported inflation.
However, with Swiss inflation now within the SNB's target range below (falling to 1.4% in November), the recent sale of foreign currencies signals a potential shift in the bank's strategy (why sell foreign currency and buy CHF to lower inflation if below the target?).
Thomas Jordan, the Chairman of the SNB, indicated that the bank would no longer focus on foreign currency sales. This shift in strategy follows a period prior when the SNB actively bought foreign currency (sold CHF) to counter the Swiss franc's rapid appreciation and then shifted to selling in Q2 2022. As a result, the Swiss franc has appreciated significantly against the dollar and euro. The USDCHF reached its lowest level since January 2015 (low reached 0.8300). The low today reached 0.8332 before rebounding and closing at 0.8447 yesterday. The price of USDCHF is down to 0.8377 today with a low of 0.8356. The EURCHF is trading at the lowest level going back to 1972 (all the data I have).
The USD today is mixed/little changed with the greenback lower vs the CHF and EUR, but higher vs the AUD, NZD and CAD today. There are no major economic releases today.
The US stock market is little changed as it strives for its ninth consecutive weekly rise. The Dow Industrial Average is up 0.87% for week, the S&P is up 0.60%, and the NASDAQ index is up 0.68%.
US yields are marginally higher. The 10-year yield yesterday moved to a low of 3.789%. The closing level for 2022 was at 3.886%. The current yield is just below that level at 3.87%.
A snapshot of the markets currently shows:
- Crude oil is trading up $0.50 or 0.70% at $72.27. At this time yesterday, it was trading at $73.25, before selling off into the close.
- Gold is trading down and dollar $0.99 or -0.1% at $2063.50. At this time yesterday, it was trading at $2076.04
- Silver is doing $0.28 or -1.12% $23.70. At this time yesterday, it was trading at $24.32.
- Bitcoin is trading at $42,836. At this time yesterday, it was trading at $42,829
In the premarket for US stocks, the major indices are marginally mixed. Yesterday the major indices closed mixed with the Nasdaq index closing lower. The S&P and Nasdaq index closed marginally higher:
- Dow Industrial Average futures are implying 15.25 points. Yesterday, the index rose 53.58.40.14 percent at 37710.10
- S&P futures are implying a decline of -0.10 points. Yesterday, the index rose 1.77 points or 0.04% at 4783.36. The index got within about three points of the all-time high closing level intraday, but backed off.
- Nasdaq futures are implying a decline of -14.97 points. Yesterday the index fell -4.04 points or -0.03% at 15095.14.
In the European equity market, major indices are lower:
- German DAX +0.30%. For the shortened week the index is up 0.27%.
- France CAC +0.37%. For the week, the index is down -0.07%
- UK FTSE 100 +0.14%. For the week, the index is up 0.46%
- Spain's Ibex +0.46%. For the week the index is up 0.21%.
- Italy's FTSE MIB +0.39% (10 minute delay)
In the Asian-Pacific market major indices were mixed:
- Japan's Nikkei 225, -0.22%. For the week, the index rose 0.89%
- China's Shanghai composite index , +0.60%. For the week, the index rose 2.06%
- Hong Kong's Hang Seng index, +0.02%. For the week, the index rose 4.33%
- Australia S&P/ASX -0.31%. For the week, the index rose 1.20%
Looking at the US debt market, yields are trading higher:
- 2-year yield 4.291%, +1.0 basis points. Yesterday at this time, the yield was at 4.262%
- 5-year yield 3.862% +1.6 basis points. Yesterday at this time, the yield was at 3.820%
- 10-year yield 3.871% +2.4 basis points. Yesterday at this time, the yield was at 3.88%
- 30-year yield 4.022% +3.3 basis points. Yesterday this time, the yield was at 3.96%
In the European debt market, the benchmark 10-year yields are higher. This week German 10-year yields move to the lowest level since December 13, 2022 at 1.877% before rebounding back about 2% today. Frances 10-year yield reached its lowest level since January 18, 2023 near 2.39% and bounced. UK 10-year yield's moved to its lowest level since April 2023 at 3.43%.
