The Swiss franc drifted lower against its major rivals on Friday’s European deals, as European shares advanced in reaction to comments by European Central Bank President Mario Draghi that the bank’s quantitative easing program would remain in place until they meet inflationary goal on a sustained basis.
In a speech in Washington, Draghi played down concerns that the stimulus efforts could fuel price bubbles in the property market and increase inequality. Draghi reiterated commitment to “implement in full” the bank’s massive bond-buying program, saying that the monetary stimulus will continue as long as it is needed.
The focus would also be on Greece after the International Monetary Fund repeated that it is flexible in talks with Greece as the Greeks meet the program objective.
Sentiment was also supported by receding fears about an early Federal Reserve’s rate hike. Thursday’s tame inflation data lent confidence that premature rate tightening may not be in the offing.
In economic front, data from the Federal Statistical Office showed that Switzerland’s producer and import prices declined for 19 consecutive months in April.
The producer and import price index declined at a faster pace of 5.2 percent from last year, following a 3.4 percent drop in March. The index has been falling since October 2013. Economists had forecast prices to fall again by 3.4 percent.
The franc experienced mixed trading in the previous session. It held steady against the pound and the euro, but was lower against the greenback. Against the yen, the franc was up.
The franc dropped to 2-day lows of 1.4479 against the pound and 0.9208 against the greenback, off early highs of 1.4379 and 0.9114,respectively. The franc may possibly challenge support around 1.46 against the pound and 0.95 against the greenback. The franc was trading at 0.9120 against the greenback and 1.4387 against the pound at Thursday’s close.
The franc fell to 1.0458 against the euro, its weakest since May 4, from its previous high of 1.0400. At yesterday’s close, the pair was worth 1.0406. Continuation of the franc’s downtrend may lead it to a support around the 1.06 zone.
The franc pared gain to 130.14 versus the yen, from its previous high of 130.99. Next key support for the franc may be located near the 125.00 mark. The pair ended yesterday’s trading at 130.57.
Looking ahead, New York Fed’s empire manufacturing survey for May, U.S. industrial output data for April and Reuters/University of Michigan’s preliminary consumer sentiment index for May are set to be published in the New York session.
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