Wednesday September 21, 2005 - 10:11:40 GMT
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INVESTICA Ltd - www.investica.co.uk
Storm fears to support franc
The dollar was able to push above the 1.28 level following the Fed's interest rate decision and the Swiss currency was broadly weaker against the Euro. The US dollar, however, weakened back to 1.2720 against the franc in early Europe on Wednesday while the franc regained some ground against the Euro and subsequently pushing below 1.27 against the dollar.
The yield considerations will remain negative for the Swiss currency following the US interest rate decision. Short-term US rates are now at 3.75% while Swiss rates are at 0.75%, increasing the temptation to sell the Swiss currency on short-term yield considerations.
Levels of risk aversion will, however, need to be watched closely in the short term and there are likely to be further fears over the threat of a fresh hurricane in the Gulf of Mexico. Market caution is likely to offer near-term support to the Swiss currency.
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