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Swiss Franc rate continues to be traded downward at the Forex currency market on Friday morning, because Swiss national Bank goes on with tracking exchange rate of Swiss Franc despite deterioration of the external background.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, shaping a buy signal. Stochastic Oscillator remains in the overbought zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.7970, the pair USD/CHF will go to 0.8000 and 0.8020. If upward breakdown does not take place, the pair will consolidate at the current levels.

SHF has not started to grow despite significant deterioration of external background: SNB is acting in opposition to market interests, as its target is to prevent growth in the national currency. One question arises then: how long for the regulator will be able to resist speculative interests of traders?

Earlier, Swiss National Bank held a round of talks with Ministry of Finance, which resulted in the declaration of complete mutual understanding in economic issues. Thus, Ministry of Finance intends to spend 2 billion francs to support economy, since exchange rate of the national currency is too overvalued which is harmful for economic system.  

In addition, authorities of the country stated that decision on the target level of Franc will be made by the CNB. We would recall situation of last week: Swiss National Bank intervened into the trades at the currency market; judging by the forwarding sector, SNB continued to infuse liquidity at the trading floors to curb the growth of the Franc. Swiss National Bank had also 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 identified the threat to economic development and stability as the major reason for this.

However, 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. 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.

It became known this week that producer prices and imports prices in Switzerland declined by 0.7% m/m (-0.5% y/y) in July against the fall of 0.6% m/m in June. In addition, consumer confidence index in Switzerland fell to -17 points in Q3 against the forecast of -5 points. The data released earlier showed that unemployment rate in Switzerland remained at the level of 3.0% in July.

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