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The Swiss National Bank Recorded the Largest Loss in the last 115 years

11/2/2022 12:32 PM

The US dollar shows a moderate decline, developing a "bearish" signal formed the day before. Market activity remains subdued as traders await today's release of the US Federal Reserve's interest rate decision. Forecasts suggest that the regulator will adjust the value for the fourth time in a row by 75 basis points to 4.0%. At the same time, the market expects that the follow-up statement will pay more attention to the risks of a possible slowdown in the economy, which will also be reflected in future monetary policy.

The macroeconomic statistics released the day before did not provide significant support to the US currency. The Manufacturing PMI from the Institute of Supply Management (ISM) in October showed a decrease from 50.9 points to 50.2 points, which turned out to be slightly better than market expectations at the level of 50.0 points, and the indicator from S&P Global in October strengthened from 49.9 points to 50.4 points, having managed to consolidate in the positive zone above 50.0 points.

The Swiss Purchasing Managers Association (SVME) PMI also showed negative dynamics in October, falling from 57.1 points to 54.9 points, which was worse than the expected 56.0 points. The Consumer Confidence Index was also disappointing: on a quarterly basis, the indicator fell from -28.0 points to -38.0 points. In addition, according to Reuters, in the nine months of this year, the Swiss National Bank recorded the largest loss in its history, losing about 70.0% of its capital (about 142.6 billion dollars) against the backdrop of depreciation of shares and gold, as well as changes in carrying out foreign exchange transactions after an increase in the interest rate. The negative dynamics will contribute to the outflow of investor funds from Swiss banks against the backdrop of increasing market uncertainty and the lack of centralized regulation of such institutions in the country itself.

Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is changing slightly, but remains rather spacious for the current level of activity in the market. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic shows a more confident growth but is rapidly approaching its highs, which reflects risks of the overbought American currency in the ultra-short term.

Resistance levels: 1.0000, 1.0050, 1.0100, 1.0146. | Support levels: 0.9948, 0.9914, 0.9876, 0.9840.

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