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Forex: USD/CAD extends gains

25.05.12

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Source: FXstreet.com

FX USD/CHF: US-Swiss tax deal could add to Swiss R/E froth

25.05.12

There are some parallels between the Swiss true estate market of late and the US one in the 2000s, though there are also some momentous differences. Low interest rates are a common thesis, but lending standards are not. Wealthy investors, many of them from widely, have kept the Swiss real social status market well bid over the past several years. Lending standards are far tighter in Switzerland than they were in the US during the 2000s, so the foam risk is overstated. The lack of handsome interest bearing returns on local Swiss accountable and a stock market being subdued by the overvalued franc's dissenting impact on exporters and tourism are factors reinforcing Swiss corporeal estate prices as an alternative investment. These have been reinforced by the upsetting events in the eurozone's periphery that has send startled money looking for a new home in the Alps. With this as a backdrop, today's moving by the Swiss lower house of a new tax entente law with the US may not be as big a threat to the Swiss economy as some anxiety. The law would allow US authorities to expand their fishing expeditions to find tax evaders in the Alpine banking center. Incessant erosion of vaunted Swiss banking furtiveness should, all else being equal, reduce flows into the franc to the lengths this is the sole reason for money being placed there. It is, of routine, not the sole reason money flows through Swiss institutions. The allied stability of the govt, its strong finances and great in extent average net worth of Swiss residents are other attractions to this inviting country. The Swiss finish may also with some needed burnishing of bank's jeopardy management absent any new rogue trading scandals or the like. There is already a predilection for haven-seeking wealth to use Swiss truthful estate and residency to avoid factious and economic perils elsewhere in Europe and in other regions. Not all property is going to want to take this leap, but we have suspicions about more will in the face of rising taxes in fiscally challenged countries of the eurozone, the UK and the US. And with Swiss mortgage rates below 3% in some cases, the apparently high prices of real development may have considerably more to go. The obvious risk is that interest rates goad, but with the SNB fighting a pitched battle against deflation and franc increase, there is virtually no risk of a near to middle-term rise in rates of a greatness needed to douse the local actual estate market. In any event, we see broader danger-on/off flows as the dominant force in USD/CHF trading. If the Fed is done with QE and the gamble is for some backtracking on its ZIRP and balance journal expansion policies in the quarters to get well, that should make the dollar relative more fetching, particularly if doubts remains at all events Europe's debt and growth prospects. © Thomson Reuters 2011. All rights frigid. Republication or redistribution of Thomson Reuters cheer, including by framing or similar means, is prohibited without the previous written consent of Thomson Reuters. Thomson Reuters is not answerable for any errors or delays in Thomson Reuters load, or for any actions taken in reliance on such soothe. ‘Thomson Reuters’ and the Thomson Reuters logo are trademarks of Thomson Reuters and its associated companies. Trading foreign swop on margin carries a high equivalent of risk and may not be suitable for all investors. The strident degree of leverage can work against you as well as for you. Before deciding to selling foreign exchange you should carefully mull over your investment objectives, level of affair and risk appetite. The possibility exists that you could keep someone going a loss of some or all of your initial investment and therefore you should not allot money that you cannot afford to lose. You should be informed of all the risks associated with foreign stock market trading and seek advice from an individualistic financial advisor if you have any doubts. Opinions expressed at FXstreet.com are those of the peculiar authors and do not necessarily represent the sentiment of FXstreet.com or its management. FXstreet.com has not verified the correctness or basis-in-fact of any claim or declaration made by any independent author: errors and Omissions may enter someone's head.Any opinions, news, research, analyses, prices or other dirt contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as usual market commentary and does not constitute investment counsel. FXstreet.com will not accept liability for any set-back or damage, including without limitation to, any wasting of profit, which may arise directly or indirectly from use of or confidence on such information.

Source: FXstreet.com