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Forex - USD/CHF soars more than 5% on SNB speculation

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Forexpros - The U.S. dollar extended sharp gains against the broadly weaker Swiss franc on Thursday, after comments from Swiss National Bank Vice President Thomas Jordan fuelled speculation the central bank would introduce further measures to weaken the currency.

USD/CHF hit 0.7686 during U.S. morning trade, the highest since August 5; the pair subsequently consolidated at 0.7651, soaring 5.31%.

The pair was likely to find support at 0.7179, Wednesday's low and resistance at 0.7801, the high of August 4.

SNB Vice President Thomas Jordan said earlier that the central bank could further ease monetary policy without having to intervene in the currency market to curb the franc's recent gains.

The comments added to speculation that the SNB could introduce some kind of negative interest rate to dampen the appeal of the soaring Swissie.

"The excessive liquidity in the franc is increasingly growing through our measures and the holding of francs is becoming increasingly unattractive," Jordan said.

Meanwhile, central bank officials declined to comment on speculation that Swiss lenders might start charging 1% on franc deposits from as early as next week.

On Wednesday, the central bank announced that it would take additional measures, including increasing liquidity to the money market and conducting foreign exchange swap transactions to curb recent gains in the Swissie.

The Swissie was also down sharply against the euro, with EUR/CHF surging 5.4% to hit 1.0857, amid speculation the SNB might link the franc to the euro.

Jordan said that a temporary tie between the Swiss franc and the euro would be legal under the SNB's mandate.

"Any temporary measures to influence the exchange rate are permissible under our mandate as long as these are consistent with long-term price stability," Jordan said.

Also Thursday, the U.S. Department of Labor said that the number of individuals filing for initial jobless benefits in the week ending August 5 fell by 7,000 to a seasonally adjusted 395,000, outstripping expectations for a decline to 401,000.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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