EUR/CHF

• EUR/CHF maintains its gradual decline to parity.
• EUR/CHF fell 0.3 percent on the day to 1.0085.
• While the yen stole the show in trading yesterday, the franc has been doing its job steadily since the SNB policy pivot two weeks ago.
• As previously stated, the change has definitely shaken up the landscape of the major currency bloc and places the franc among the frontrunners given the timing of the surprise and how shaky markets currently appear.
• The Swiss franc is the best performer today, with USD/CHF falling 0.5 percent to 0.9565, while EUR/CHF is currently testing daily support from the April lows at 1.0088-89.
• A firm break below that opens up another chance for the pair to achieve parity, and this time there may be more conviction to do so after the March attempt failed.

Dollar

• The stronger risk appetite weighs on the dollar and the yen for the time being.
• There’s been a bit of a push in European morning trade, with EUR/USD now up to 1.0550 from around 1.0525 earlier.
• This comes as European bond yields have risen, with 10-year German bund yields up 2 basis points on the day to 1.44 percent. At the start of the session, the low was around 1.35 percent.
• Equities are also maintaining more modest gains, weighing on the dollar and the yen. GBP/USD is up 0.3 percent to 1.2300, while USD/JPY is now back above 135.00.
• Elsewhere, USD/CAD has eased from 1.2975 to 1.2960 on the day, while AUD/USD is up 0.4 percent from 0.6895 to 0.6920. Overall, the changes are minor and not technically significant, but they are at least reassuring for risk sentiment as a whole.
• Looking ahead to the weekend, the USD/JPY remains the big one to watch to see if buyers have the appetite to keep above the 135.00 mark after the breakout attempt earlier in the week.

Major currencies

So far today, major currencies have seen little movement.

The yen was a notable move early in Asia trading, with a push in USD/JPY from 134.70 to 135.22 before falling back to around 135.50-70 levels at the moment. For the time being, the hold below 135.00 is critical and will be the thing to watch as the week comes to a close.

Other major currencies are showing little appetite, with relatively narrower ranges on the day. The fact that most dollar pairs are trading within 20 pips of one another exemplifies the session’s lack of conviction thus far.

Market expectations for the Fed’s terminal rate have been reduced; the same can be said for the ECB and BOE this week; the yen sought a further downside leg but has since recovered; strong technical pushback

Oil remains in a difficult situation as the downside push remains below key technical levels.

Recession risks increase as bond yields fall.

The calmer tone in the bond market is also helping, though European yields are falling even more after yesterday’s big drop. German 10-year bund yields are down 2 basis points to 1.40 percent.

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