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European Session – Euro falls close to SNB exchange rate floor versus Swiss Franc

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The euro came dangerously close to the Swiss National Bank’s exchange rate floor of 1.2000 Francs today, touching as low as 1.2007 in early European session trading. This was the lowest level in 27-months. Safe haven flows are helping buoy the swissie while the SNB’s avoidance of moving to negative interest rates after a policy meeting on Thursday also helped support the Swiss currency. The central bank kept rates at 0.00–0.25%.

The euro however bounced against the US dollar in early European session trading, rising from 1.2383 to a high of 1.2453. This rally happened despite disappointing Eurozone data which showed industrial production slowed sharply in the Euro area in October. Industrial output rose only 0.1% month-on-month in October for a 0.7% year-on-year gain. Economists had expected a 0.2% monthly increase and a 0.6% year-on-year increase.

The commodity-linked currencies were in focus again today as oil prices continued to tumble, reaching a new 5-year low and dragged down the Canadian dollar and the Norwegian Crown. The loonie weakened to its lowest in over 5-years against the greenback today as crude oil prices fell below the key $60 per barrel level to $58.82 by 09:20 GMT today. Canada is an oil-producing and exporting country, so its currency is impacted by oil prices. Dollar/cad rose to 1.1562 by 10:42 GMT.

Likewise, Norway is an oil producer and its Norwegian Crown fell to the lowest in 11 years  today. The dollar rallied to a high of 7.3947 against the Crown, the highest since the summer of 2003. Norway’s central bank unexpectedly cut interest rates on Thursday, which further weighed on the Crown.

The bearish demand outlook for oil amid persistent concerns over a global supply glut will likely keep the Crown and the loonie under pressure. Meanwhile, the Organization of Petroleum Exporting Countries (OPEC), cut its 2015 demand forecast this week to the lowest in more than a decade.

Looking ahead, there will be two economic releases during the US session later today.  The US Producer Price Index and the University of Michigan Consumer Sentiment report. The inflation index is expected to show a small drop but expectations are for the consumer confidence report to improve.

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