After more than three years of stability between the euro and the Swiss franc, the Swiss Central Bank (SNB) last week decided to terminate the exchange restriction that impeded the growth of the Swiss currency. SNB has further reduced interest rates on deposits at -0.75%. From the moment the decision is published franc rose sharply breaking the previous limit. Having equalized with the euro, continued growth and through 1:10 euro for one franc. In addition to growth in the franc against the euro has risen in relation to all regional currencies like the dollar in relation to which rose 18%. SNB months resists pressure to leave the limit of the exchange rate against the euro and Swiss currency investors are of great financial crisis considered a safe-haven investment, and this is why. Switzerland’s economy is highly export-oriented, so that the SNB afraid to too strong franc could restrict economic growth. When the 2011 years Swiss National Bank decided to prevent the strengthening of the domestic currency. In addition to the reduced risk of deflation this move gave the Swiss exporters, which 56% of its products sold outside the borders of Switzerland, protection of the poor competitiveness, which would increase the franc certainly caused. The latest decision of the SNB again this risk back into the game so that the trade unions began to warn that such a move will have a negative impact on the number of jobs but also profits in export-oriented enterprises. According to CME Group sudden move of the SNB and the huge fluctuations franc arising there from, the greatest impact on the market had to speculative investors such as hedge funds, which are stitched up two weeks ago in the largest number of sales positions in June 2013. The latest data show that hedge funds and other speculative investors were at a loss to 24,171 futures contracts and additional 662 options worth 3.5 billion dollars. And financial institutions are also covered by this market turbulence. IG Group issued urgent announcement that it could suffer a loss of 30 million pounds. After a reduction in interest rates and the abolition of exchange restrictions franc, Switzerland remains a number of difficulties that must face in the future. Like most economies in the euro zone and Switzerland has a problem with persistently low inflation and slow economic growth as a strong franc can only further worsen. The long-term impact of the SNB to lift the exchange restriction to the franc will depend on the level at which the franc stabilized against the euro. Levels below 10.1 could further complicate the situation.
Under pressure from the strong dollar, the price of gold is still on a downward trend that began in early February and since has fallen even 8:45%. Lately, a lot is happening in the euro area and it is of course reflected in the financial markets, the movement of the euro but also on the price of gold. From 9 March, the European Central Bank begins with a program of buying bonds that will last at least until September 2016, which will significantly increase the liquidity in the market. Recently, we have noticed the increase in demand when it comes to gold coins and bullion. According UK Mint, the demand for gold is increasing especially in the physical form. The crisis in Greece and it’s still uncertain future in the euro zone, have led to more people start buying gold to secure their property. This trend is likely to increase in the future, if the crisis continues, and it is very likely. If it does happen to this country leaving the euro zone and reintroduce the drachma as the national currency, the value of which citizens possessed in euro will be decimated, and it is easy to conclude that all who are in a situation, try to secure their property, and gold has traditionally the role of guardian of values. Another interesting fact that we saw in 2014. This is a big difference in the movement of the gold price in relation to the different currencies. More specifically, the price in dollars has been quite stable during 2014 but it is in other currencies rose. Gold is still retained the role of guardian of values. People continue to buy the precious metal as a long term investment, especially if you expect some instability, whether economic or political type. For example, in Russia investors who invested in the precious metal, they have succeeded in considerably greater extent than the other, to preserve their property. No matter what the price of gold mainly denominated in dollars, the fact is that for individual investors is very important what is its price in local currency, as this is what really dictates the behavior of investors. Bright spot when it comes to the growth of gold prices is the emergence of reports that suggest that the central bank, which until recently were selling gold, now once again starting to buy. Russia once again lead in it. It can be generalized is that central banks in developing countries tend to buy gold to diversified its reserves which are largely in dollars. For now, the percentage of gold reserves in developing countries is still on average small, around 3%, which confirms the claim that it can be expected that countries will continue in the future with the purchase of gold. To many other factors in each case will have a dominant influence the movement of just US currency.
After seven months continuous fall in crude oil prices finally stabilized and with lower growth reached the highest level since the beginning of the year. In the last three weeks the price has risen 24.5%, which is the largest three-week growth rates since January 2009, and currently is around $ 54 per barrel. The downward trend that preceded this growth, influencing the price of crude oil is lowered from $ 107 to less than $ 43.50 per barrel during the last seven months. The increase in price caused by the recent events that have pointed to a possible decline in production. British Petrol recently announced that it would reduce investment in new projects. And the other big oil companies have brought a similar decision. According to Baker Hughes, company which is engaged in servicing oil wells, ordering drilling rigs fell to the lowest level in the last three years which is a clear sign of the decline of interest in new oil wells. In addition, other factors have contributed to the growth of prices. Among other things strike of workers in some oil refineries in the United States raised the price of gasoline and diesel because of fears that it will be a decrease in the production of this fuel. Large producers such as Russia, Venezuela and Iran are already in a difficult situation because of the current low price. While lower prices mean that the fuel cheaper, yet at the same time mean an increase in geopolitical and social instability. Whether the price stabilizes at 40 or 60 dollars a barrel, it is well below the optimal $ 100 and many economists believe that it will be done a lot of pressure on inflation. Many analysts believe that despite the decrease in production of global demand will soon increase. Moreover, stocks continue to rise. Only in the US are currently at the highest level in the last 84 years, as confirmed by the data of the American Petroleum Institute. The question that lately quite often asked is whether this is definitely the bottom or the price will continue to fall. However, it is too early to say. When price declines sharply from previous lows rarely growth continues, usually the price previously stabilized. Yet what makes the most economists agree is that after a period of stabilization, we can expect a gradual increase in prices. According to some estimates, the price of crude oil over the course of this year can again climb above $ 60 per barrel. The price of crude oil has risen sharply during the night, due to increased tensions in the Middle East because of the situation in Yemen. In less than 24 hours, the price has risen to $ 4 that is made even oscillation of 7.47% and is currently at the level of $ 51.44 a barrel.