Swiss Franc Rises Amid Global Bonds Sell Off

(RTTNews) - The Swiss franc strengthened against other major currencies in the pre-European session on Friday, with rising government debt among the world's top nations and strong fiscal position of Switzerland.

This week, global Treasury yields increased and risk aversion predominated. As budget deficits grow and rising energy costs compel most of the major central banks to tighten their monetary policies, investors are expecting bigger returns when purchasing government bonds.

With a total net debt of CHF 149 billion, or around 15% of its GDP, Switzerland ranks out in this regard. On the other hand, France's debt has risen to 119% of GDP, heightening the possibility of a fresh Eurozone credit crisis. The US exhibits a 125% debt-to-GDP ratio, whereas Japanese debt is well beyond 200% of its Gross Domestic Product.

The Swiss National Bank (SNB) has been compelled to maintain interest rates at zero percent due to moderate Swiss inflation and an unclear economic outlook during the trade spat with the United States. The relatively low SNB rates have drawn the attention of carry traders and threatened to push the CHF into a tailspin as global central banks tighten their monetary policies.

Traders may adopt a cautious approach ahead of the release of the U.S. Labor Department's closely watched monthly jobs report later in the day.

Economists expect employment to increase by 90,000 jobs in September after an increase of 162,000 jobs in August. The unemployment rate is expected to hold steady at 4.1 percent.

Much attention will be on hourly earnings after the ISM survey flashed a strong warning that inflation is resurgent.

In the European trading today, the Swiss franc rose to a 1-week high of 190.69 against the yen and nearly a 1-1/2-month high of 0.9306 against the euro, from early lows of 189.86 and 0.9353, respectively. If the franc extends its uptrend, it is likely to find resistance around 193.00 against the yen and 0.92 against the euro.

Against the pound and the U.S. dollar, the franc advanced to 8-day highs of 1.0923 and 0.8267 from early lows of 1.0978 and 0.8327, respectively. The franc may test resistance around 1.08 against the pound and 0.81 against the greenback.

Looking ahead, U.S. jobs data for September, factory orders for August, U.S. Baker Hughes oil rig count data are slated for release in the New York session.