Global macro overview for 18/04/2018

A Swiss franc has made a pretty huge impression on global investors recently. Over the last day, EUR/CHF caught by 1.1970, which is very close to the level of 1.20, when the SNB stopped defending the franc and provided one of the largest breakdowns.Weakness, however, has a rather strange basis.

First of all, the last sanctions imposed by the US on Russian oligarchs forces them to transfer capital from Switzerland. Liquidation of shares in Swiss companies, a pressure of international banking groups for fear of White House restrictions, or simple withdrawal of deposits for rescuing overestimated assets in Russia. There are hundreds of millions of CHF that go through the usually calm market. Additional pressure on the franc is triggered by the civic initiative of introducing Vollgeld, which is all about forbidding the creation of money for commercial banks. The referendum on this matter is to take place on June 10, but concerns are already being raised that the victory of this initiative will be a serious threat to the economy (it will limit the supply of credit, increase the costs of financial services).

Let's now take a look at the EUR/CHF technical picture in the daily time frame. In total, both issues in the short term will weigh on the franc and for the first time in over three years, so the market can return above 1.20 per EUR. However, due to the fact that the reasons for increases are not strictly fundamental, while the EUR position is deteriorating, the EUR / CHF should not go up that high for long. The nearest technical support is seen at the level of 1.1834. Please notice the extremely overbought market conditions.

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