On Thursday, precious metals began advancing straight from the beginning of the day and finished near or above 4-month highs. This week, on the whole, has been extremely beneficial for gold and silver as the risk-off attitude exhibited by investors only seems to be intensifying. Just today, the Swiss National Bank made a surprise move that sent the global marketplace into a state of panic. Of course, as you could have probably guessed, the ensuing panic boded extremely well for spot values.
As we look forward to the rest of the month of January, the economic data and economic happenings do not stop. Next Thursday will see the European Central Bank meet for their monthly meeting and, after yesterday saw the European Court of Justice approve the ECB’s quantitative easing plans, most investors are expecting to hear a major policy shift be announced at next week’s meeting.
Swiss National Bank Unpegs Franc
In a move that caught the whole world by surprise, the Swiss National Bank announced this morning that it would be unpegging the Franc from the Euro. Naturally, such a major decision being made with little to no warning sent the global marketplace into a bit of a panic as financial and equity markets across the globe suffered. The Swiss Franc, on the other hand, almost immediately rallied by more than 20% against the beleaguered Euro.
For those who are unaware, the SNB decided to peg the Franc to the Euro back in 2011 as a means of preventing the rapid appreciation of the country’s currency. Now, the outlook on the Euro has diminished considerably and it should really come as no surprise that the SNB made this move. In all reality, I would not be surprised to see other countries, who also have their currencies pegged to the Euro, to consider making similar moves.
Looking ahead to the rest of the week and the month, I anticipate that all the eyes of the investing world will be firmly fixated on the European Union. With the upcoming ECB meeting, today’s announcement, and the continued depreciation of the Euro, investors cannot seem to stop paying attention to the region.
In other news, yesterday saw the latest US retail sales report from December come back much weaker than expected. While investors and market experts alike anticipated that December retail sales in the US would tick upward by about .2%, yesterday’s figures showed that retail sales fell by .9% in December. This news immediately had a negative impact on the value of the Dollar as well as US equities. Now, with US economic data being more poor than anything else, it will be interesting to see if the Fed is still dead-set on raising interest rates this year.