DOLLAR RISES AS KUDLOW REPLACES COHN. SNB LEAVES RATES UNCHANGED

The Swiss Franc fell against the major currencies after the Swiss National Bank released its interest rate decision. In the quarterly meeting, the bank left interest rates unchanged at -0.75%. It left the target for the London Interbank Offered Rate (LIBOR) unchanged at between -1.25% and -0.25%. The officials said that they expect the inflation rate to rise to 1.9% in 2020. Still, there are no signs of tightening because of the strong franc.

The dollar index rose after Donald Trump officially appointed Larry Kudlow to be his National Economic Advisor. Before his appointment, Kudlow was a television commentator for CNBC. In an interview yesterday, he said that he preferred a stronger dollar. This is in contrast to what Donald Trump wants as he tries to boost exports. He has also disagreed with Trump about tariffs, which he believes will cause a trade war. In his interview yesterday, he advised traders to buy the dollar and short gold. Today, gold is down by more than half a percent.

The New Zealand Dollar fell by more than 0.55% after the country’s statistics bureau released the GDP numbers. The data released today showed that the country’s revised quarterly GDP grew by 0.6%. This was lower than the 0.8% the market was expecting. On an annual basis, the GDP grew by 2.9%, which was lower than the expected 3.1%. The economy was affected by the longer-than expected dry weather, which affected dairy production.

EUR/USD

The pair continued its downward movement after the appointment of Larry Kudlow. It is now trading at 1.2330. The divergence between the short and longer-term moving averages as shown below is an indication that the pair could continue the downward trend. Nonetheless, this could change tomorrow when the EU releases inflation data.

USD/CHF

The pair is trading at 0.9473, which is the highest level in two days. As shown below, the pair’s Oscillator of Moving Average is currently at 0.00024, which is a significant resistance level. If this indicator breaks to the upside, the pair could continue its upward momentum, potentially to the 0.9490 level.

NZD/JPY

Using the hourly chart shown below, the pair broke a major support level yesterday and continued its downward momentum today. This followed the weaker GDP numbers released by the statistics office today. The pair is now trading at 77.25. At this stage, the question is whether the pair will continue the downward momentum or reverse. The likelihood is that the pair will continue moving down as evidenced by the Average Directional Index which is at 38 and moving higher.