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Swiss Franc and British Pound Fell as Banks Surprisingly Left Rates Stable

Miguel A. Rodriguez
Miguel A. Rodriguez
22 September 2023

This week is set for Central Bank rate decisions. After the Fed decided to keep its interest rates unchanged on Wednesday, the Swiss National Bank and the Bank of England followed the same strategy yesterday. This brought the currencies of these countries down, while the US Dollar and Treasury bond yields gained. 

The Swiss National Bank and the Bank of England keep rates stable

Yesterday both the Swiss National Bank and the Bank of England agreed to keep interest rates stable, surprising markets.  

Following the decisions, the Swiss Franc and the British Pound fell as markets expected both central banks to raise interest rates at least one last time. The GBP/USD pair traded lower than the 1.2300 benchmark.

The US Dollar soared yesterday

The US Dollar was the winner of the session yesterday. This is especially due to the Federal Reserve (Fed) convincing markets that interest rates will remain at the highest levels in two decades for a long period of time.

This news also caused Treasury bond yields to continue rising, with the 10-year treasury yield reaching 4.45%, its highest level since 2007.

Stock indices fell on unemployment claims data

The North American stock indices continued to decline yesterday. The decline was due to the high market interest rates which rose higher after the release of the US unemployment claims data. The report showed a total of 201k, the lowest since January, indicating a still solid labour market.

The Nasdaq index experienced the greatest fall. Along with the S&P500 and the DowJones, the three indices are beginning to show worrying signs of vulnerability from a technical perspective with head-shoulder patterns. If confirmed, it could open the way to greater losses.

Breakdown of technology stock movements

It is worth highlighting the yesterday’s performance of the following technology stocks:

Cisco Systems Inc. fell after agreeing to buy the cybersecurity company Splunk Inc. in a $28 billion deal.

Arm Holdings plc briefly fell below its initial public offering price yesterday.

Broadcom Inc. sank following a report that Alphabet Inc.'s Google is thinking about dropping the company as a supplier of artificial intelligence chips starting in 2027.

Broadcom Ltd.png

Broadcom Ltd monthly chart, September 22, 2023. Source: CAPEX.com WebTrader.

Key Takeaways

  • The Swiss National Bank and the Bank of England surprised markets by leaving their rates unchanged.
  • The Swiss Franc and the British Pound fell on the news.
  • The GBP/USD pair traded lower below the reference level of 1.2300.
  • The US Dollar was the big winner of yesterday’s session.
  • Treasury 10-year treasury yield reached its highest level since 2007.
  • American indices continued to fall on unemployment claims data.
  • Technology stocks suffered the most.

Related Articles:

Sources: Bloomberg, Reuters 

 

 

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.