Well, of course the turn in market sentiment is arguably the more important driver but the technicals will surely only add to the conviction among tra
Well, of course the turn in market sentiment is arguably the more important driver but the technicals will surely only add to the conviction among traders. The drop yesterday fell short of firmly breaking the 100-day moving average (red line) and with Credit Suisse getting a lifeline, we are seeing fears subside as the euro and franc are pushing higher.
If you want to read more about how exactly is Credit Suisse planning to get out of this one, you can refer to this post here.
Essentially, markets may find themselves pitted against the SNB and when you run up against a central bank with no shortage of liquidity (plenty of reserves) and a government with little fiscal constraints, that is one tough battle to win.
That is not to say that the SNB will just offer constant handouts to Credit Suisse though. There has to be a better long-term solution, which may involve a takeover by UBS.
Going back to the euro, the bounce today is a timely one as seen on the chart and the currency could get an added boost from the ECB later today.
The market-implied probability of a 50 bps rate hike has now climbed to roughly 43% (from about 10% earlier in the day) and based on that sort of pricing in the rates market, the euro stands to benefit if the ECB can stand its ground without causing too much market turmoil.
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