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At the Forex currency market Swiss Franc rate is traded slightly downward on Friday.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and is going down, giving a sell signal, while volumes are minimal. Stochastic Oscillator is moving in the sideways in the neutral zone, not giving a clear signal.

Forex recommendations: in case of breakdown at the level of 0.8800, the pair USD/CHF will go to 0.8815 and 0.8835.

Representative of Swiss National Bank said this week that strong Franc continues to exert pressure on the economy of the country and in the event of deflation the SNB is prepared to take extreme measures.

He reiterated that economy of Switzerland is extremely dependent on exports.

It became known earlier that business activity index PMI in Switzerland fell to 46.9 points in October against the forecast of 47.7 points. For the present, it is also the aftereffects of the expensive national currency.

We would remind that kick-start for consolidation of the Franc was triggered last week when the pair USD/CHF went down, following EUR/CHF, which had been actively sold out by one of the Swiss Banks and British Clearing Bank, as dealers explained. It is worth noting that SNB gave indications in September that could have been interpreted as follows: regulator’s power to support the Franc is fading away. Recall that according to the rumors which are growing louder among investors in the market, SNB can revise its stand on the key levels and peg exchange rate of the pair EUR/CHF to around 1.25. Therefore, reserves of the CNB seem to disappear before our eyes along with determination of the Bank to curb the Franc. Earlier Trade Union of Switzerland urged authorities and the Bank to toughen the fight against expensive Franc suggesting to increase minimum allowable exchange rate of the pair EUR/CHF in order to avoid recession. Representative of the Trade Union believe this measure will also support employment sector.

Surplus of trade balance amounted to 1850 billion SHF. It became known earlier that consumption indicator UBS in Switzerland rose to 0.84 points in September against revised level of 0.80 points in August.  Taking into account that the data reflects the figures of the months when SNB has fixed the rate of the Franc, the index looks very much positive. Producer prices and import prices in Switzerland declined by 0.1% m/m (-2.0% y/y) in September; Franc hardly reacted to statistics. Statistics released earlier showed that unemployment rate in Switzerland remained at the level of 2.8% in September as expected. Employment sector is stable so far; however repercussion of the expensive national currency is possible.

According to the annual report of the SNB, over the second half of the year economy of the country will move in the sideways, due to the impact of the expensive Franc and sharp decline in foreign demand. Thus, GDP in Switzerland will amount to 1.5%-2.0% this year and main growth will attribute to the results of the first part of the year. SNB noted in the comments that if stringent monetary measures had not been taken the economy would have slipped to a recession. SNB expects that inflation will be at the level of 0.4% in 2011 and at the level of 0.3% next year.

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