Investing.com - The dollar fell to three-week lows against the Swiss franc on Friday as a move by the Swiss National Bank to tighten monetary policy and a selloff in emerging markets saw investors flock to the traditional safe-haven franc.
USD/CHF fell to lows of 0.8902, the weakest since January 2 and was last down 0.32% to 0.8943. For the week, the pair was down 1.82%.
The pair is likely to find support at 0.8865, the low of December 31 and resistance at 0.9000.
Market sentiment was hit by concerns over a slowdown in China after data on Thursday showed that the preliminary reading of the HSBC manufacturing index fell to a six-month low in January.
A selloff in emerging markets accelerated on Friday, after the Turkish lira fell to the latest in a series of record lows against the dollar, when a currency market intervention by Turkey’s central bank failed to halt the currency’s steep decline. South Africa’s rand, the Russian ruble and the Argentine peso fell to multi-year lows against the dollar.
Argentina''s central bank said Friday it was loosening strict foreign exchange rules, giving up its traditional policy of supporting the currency through interventions.
Emerging market currencies have been hard hit since the Federal Reserve announced plans last month to begin scaling back its asset purchase program. Recent indications that the global economic recovery is deepening has fuelled expectations that some central banks may move to tighten monetary policy this year.
The Swiss franc received an additional boost after Switzerland’s government on Thursday increased the amount of capital banks must hold to guard against mortgage write-downs. Switzerland’s government said it agreed to the SNB’s request to raise the level of capital banks must hold to underpin mortgage lending, in order to curb the country’s booming housing market.
Elsewhere, EUR/CHF fell to a one-month low of 1.2231 on Friday.
In the week ahead, Wednesday’s outcome of the Federal Reserve’s monthly meeting will be in focus amid expectations for a reduction to USD65 billion from the current USD75 billion in the bank’s stimulus program.
Data from the U.S. on fourth quarter growth will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 27
The U.S. is to produce data on new home sales, a leading indicator of demand in the housing sector.
Tuesday, January 28
The U.S. is to release data on durable goods orders, a leading indicator of production, as well as what will be a closely watch report on consumer confidence.
Wednesday, January 29
The Federal Reserve is to announce its federal funds rate and publish its rate statement.
Thursday, January 30
Switzerland is to publish its KOF economic barometer.
The U.S. is to publish preliminary data on fourth quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.
Friday, January 31
The U.S. is to round up the week with a report on manufacturing activity in the Chicago region, revised data on consumer sentiment and a report on personal spending.
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