Aussie jumps after surprise election results
The Swiss Franc rose today against the USD after the Swiss voted to eliminate some tax breaks for multinationals. The measure is aimed at bringing the country in line with international norms and practices while maintaining its status as a low-tax country. The vote passed by 66% to 34%. In the past few years, the country has come under pressure from the European Union to reform its system, and remove the special deals. The measure was backed by the Swiss business groups such as the Swiss Insurance Association. In recent months, the Swiss economy has shown signs of weakness, fueled by poor external demand of its products.
The Australian dollar rose sharply today after the country’s election over the weekend. In the election, the right-wing party of Scott Morrison won by a large margin, forcing the opposition leader to resign. Morrison’s party was propelled by his campaign pledge of improving the country’s economy. The Labor party on the other hand campaigned on climate change, income inequality, and other social issues. The results came as the country’s economy has shown signs that it is struggling after a 27-year period of growth.
Global stocks were mixed as investors waited for the Chinese reaction to the US Huawei ban. In a statement last week, the US president called on the US firms to stop supplying the company with their technology. Earlier today, Google announced that it will limit the Android features it provides to the company. Other companies like Nvidia, Broadcom, and Qualcomm could stop supplying the company with chips. This will lead to challenges in the company’s smartphone and computing business, which rely heavily on American parts.
The Japanese yen rose today after a stream of positive data from Japan. In the first quarter, the country’s economy expanded by an annualized rate of 2.1%, which was better than the expected decline of -0.2%. On a quarterly basis, the economy rose by 0.5%, which was higher than the expected decline of -0.1%. The capital expenditure in the quarter declined by -.03%, which was better than the estimates forecast of -1.7%. The external demand rose by 0.4%, topping analysts’ expectations of 0.4%.
The EUR/USD pair was little moved today as traders focused on the political issues in Europe. The pair is now trading at 1.1160, which is slightly above the intraday low of 1.1150. The price is along the middle line of the Bollinger Bands. The signal line of the MACD is below the neutral line but moving higher. The pair could continue moving higher to test the 38.2% Fibonacci Retracement level of 1.1180.
The USD/CHF declined today after the vote in Switzerland. The pair dropped to a low of 1.010, which is along the 23.6% Fibonacci Retracement level. On the hourly chart, the pair is along the lower line of the Bollinger Bands. The Chaikin oscillator is below the neutral line while the accumulation/distribution indicator has continued to move up. The pair will likely resume the upward trend to test the 50% Fibonacci Retracement level of 1.0138.
The AUD/USD pair rose sharply after the Australian election. It reached a high of 0.6933 and then erased some of those gains. It is now trading at 0.6915. On the hourly chart, the price is along the 25-day moving averages and below the 50-day moving averages. The commodity channel index (CCI) has reached the overbought level while the money flow index has moved above the oversold level. There is a likelihood that the pair will resume the downward trend as investors focus on fundamental issues like trade.