In early deals on Wednesday, the Swiss franc slumped to a 1-week low against the British pound after a report showed that the Swiss SVME PMI stayed at a record low in March. The franc also showed weakness against the currencies of US, Europe and Japan. The franc thus fell from a 5-day high against the yen and a 20-day high against the euro.
The Swiss SVME Purchasing Managers' Index or PMI stagnated at a record low of 32.6 in March, a report from Credit Suisse showed today. Economists had expected the reading to rise to 33 in March. The index has not posted a further fall for the first time in 15 months.
A reading below 50 suggests contraction in economic activity, while a reading above 50 indicates expansion. The PMI has remained below the threshold for the seventh straight month.
The SVME Purchasing Managers' Index is a joint project between the SVME Association of Purchasing and Materials Management and Credit Suisse.
World leaders including U.S. President Barack Obama will gather in London today for final talks on the eve of a G20 summit dogged by divisions on how to tackle the economic crisis. While the United States and others favor stimulus to boost economic growth, European countries led by France and Germany are skeptical about spending more than they have, and insist tighter global financial regulation is the priority.
The Swiss franc dropped to a 1-week low of 1.6467 against the pound in early trading on Wednesday. This may be compared to yesterday's close of 1.6330. On the downside, 1.666 is seen as the next target level for the Swiss currency.
During early deals on Wednesday, the Swiss franc ticked down against the dollar and touched a low of 1.1471 at 3:35 am ET. The next downside target level for the franc is seen at 1.155. The dollar-franc pair was worth 1.1396 at Tuesday's close.
The Swiss franc weakened against the yen after hitting a 5-day high of 87.37 at 7:55 pm ET Tuesday. As of now, the franc-yen pair is worth 86.14, down from yesterday's New York session close of 86.87. If the pair falls further, it may find near term support around the 85.3 level.
The yen fell across the board in early Asian trading today after a report showed that Japan's business confidence tumbled at its fastest pace ever in the first quarter to the worst on record.
The Bank of Japan's Tankan Survey revealed today said that Japanese sentiment among large manufacturers plummeted at a record rate in the first quarter of 2009, posting a diffusion index score of -58,. That was worse than analyst expectations for -55 following a score of -24 in the previous quarter.
It was the sixth straight quarter of decline, and the fall of 34 points from the previous survey in December marked the largest fall on record. It was also worse than the previous record low of -57 in June 1975. However, the large manufacturers' outlook for the June quarter posted a mild recovery, coming in at -51.
Against the euro, the Swiss franc surged to a 20-day high of 1.5065 by about 8:15 pm ET Tuesday. Thereafter, the franc reversed direction and the pair is currently quoted at 1.5120 with 1.514 seen as the next target level. At yesterday's close, the euro-franc pair was quoted at 1.5105.
Investors are now likely to focus on the Euro-zone unemployment report for February, which is due for release at 5:00 am ET. The jobless rate is expected to rise to 8.3% in February from 8.2% last month.
Turning to the US, the ADP National Employment report, which sheds light on non-farm private employment, is scheduled to be released at 8:15 am ET.
The Commerce Department's construction spending report to be released at 10 am ET is expected to show a 1.6% decline in spending for February.
At the same time, the results of the manufacturing survey of the Institute for Supply Management and the pending home sales are due out. Economists expect the ISM index to show a reading of 36 for March. The pending home sales is likely to show a 2% decline for February.
The Energy Information Administration is scheduled to release its weekly petroleum inventory report at 10:30 am ET.
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