RTTN:Dollar Mixed, Swiss Franc Plunges After SNB Intervention
(RTTNews) - The dollar was mixed in volatile trading Tuesday morning, after Swiss authorities shocked the currency markets with a stunning intervention designed to take down the "massively overvalued" franc.
Backed by recent economic figures showing that the unusually strong franc poses an acute threat to the economy and carries the risk of a deflationary development, the Swiss National Bank central bank fixed the minimum rate at CHF 1.20 per euro.
The SNB said it will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in "unlimited quantities."
The euro rose a whopping 12 centimes versus the franc, skyrocketing to CHF 1.2190 from CHF 1.1027, before settling near 1.2030.
The dollar advanced to CHF 0.8572 versus the franc -- its highest since setting a record low near CHF 0.70 about a month ago.
On the other hand, the dollar fell sharply sharply versus the euro, slipping to $1.4260 from a nearly 2-month peak of $1.4037.
The Euro zone economy grew at a modest rate in the second quarter, amid dwindling confidence levels and weak demand, with expansion in Germany, the region's largest economy, almost grinding to a halt.
Gross domestic product grew 0.2 percent sequentially in the second quarter, latest figures published by Eurostat confirmed Tuesday. This followed a 0.8 percent expansion in the first quarter.
The dollar gained on the yen, rising to Y77.50 from 76.70. The pair has been range-bound near the dollar's record low of Y75.93 set August 18.
Overnight losses were reversed against the sterling, with the dollar bouncing back to GBP 1.6080, keeping its recent gains.
Looking at today's U.S. economic calendar, the Institute for Supply Management is scheduled to release the results of its non-manufacturing survey at 10 am ET. The non-manufacturing index is likely to show a reading of 51 for August after it fell to 52.7 in July.
Minneapolis Federal Reserve Bank President Narayana Kocherlakota is due to speak to the Carlson School of Management in Minneapolis at 1:10 pm ET. Kocherlakota was a dissenting voter at the Fed's August meeting.
