BLBG:Dollar May Reach Parity With Swiss Franc in Three Months, Barclays Says
Barclays Plc advised investors to bet the dollar will strengthen to parity with the Swiss franc in three months as Europe’s worsening sovereign debt crisis increases the refuge appeal of the U.S. currency.
“At this stage, we favor being long dollar-franc,” London-based strategist Sara Yates wrote in a research note today. “Assuming that prospects do improve within the euro area, the franc’s value as a hedge will diminish. If, however, euro area events get much worse, we think it would become an increasingly important problem for global financial markets. In which case, even given the weak payrolls data, the dollar looks best placed to benefit.”
Barclays recommended buying the dollar at 83.50 centimes and placing a so-called stop loss order at 79 centimes. The dollar was last worth more than the franc on Dec. 2, 2010.
The greenback weakened 0.1 percent to 83.56 at 4:20 p.m. in New York, from 83.66 on July 8. The dollar has weakened 10.5 percent this year against the franc.
Italian bonds plunged and the country’s stocks fell to the lowest in two years today as euro-area finance chiefs failed to convince investors that the region’s second-most indebted nation will avoid following Greece, Ireland and Portugal in needing a bailout.
The yield on the nation’s 10-year bond rose 42 basis points, or 0.42 percentage point, to 5.68 percent, the highest in more than a decade.
To contact the reporter on this story: Joe Ragazzo in New York at jragazzo@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
