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At the Forex currency market Swiss Franc rate continues to be traded upward on Wednesday; demand for the currencies of safe harbors is so high at the moment, that even measures taken by the SNB cannot prevent strengthening of the CHF.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal. Stochastic Oscillator is still in the oversold zone and maintains a sell signal.

Forex recommendations: in case of breakdown at the level of 0.7220, the pair USD/CHF will go to 0.7200 and to new highs of 0.7190. If downward breakdown does not take place, the pair will consolidate at the current levels. High level of oversold is being observed at the moment.
It became known this week that consumer confidence index in Switzerland fell to -17 points in Q3 against the forecast of -5 points. The data released yesterday showed that unemployment rate in Switzerland remained at the level of 3.0% in July.

Talk that intensifies at the market says that as far as measures of the CNB did not succeed and the rate tends to zero, regulator can choose a different option guided by the experience in Brazil, and introduce a negative rate or tight control over capital movement.

As we expected before, Swiss National Bank will have to confront a huge number of currency investors, who try to hedge risks in the Franc, due to the increasing instability in the market, the demand in CHF has risen again.

Due to the aggravated situation in the U.S. economy, agency S&P has downgraded rating of the country by one step and gave the U.S. a “negative” forecast. This, along with the spreading of debt problems of the Eurozone towards Italy caused the rise of investors’ interest in safety currencies.
According to statistics released earlier, level of retail sales in Switzerland rose by 7.4% y/y in June against the revised level of -3.9%  y/y in May. In addition, index of PMI SVME increased to 53.5 points in July versus the forecast of 52.5 points.

Current data shows that the data released previously has been of a seasonal character and does not indicate recession of the economy. Index of leading indicators KOF in Switzerland fell to 2.04 in July, while the forecast had been 2.11.  The data released earlier showed that trade balance in Switzerland totaled +1.74 billion francs in June against preliminary revised level of +3.25 billion francs.

We would remind that earlier, Swiss national Bank had restricted three- month Libor rate to 0-0.25% (it had amounted to 0-0.75% previously). They also stated that increasing rate of the Franc is a negative factor for the national economy; therefore Libor rate will tend to zero and the SNB is going to infuse liquidity into the market in the nearest future to “chill out” the Franc. SNB named the threat to economic progress and price instability as main arguments.

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