Forex Blog
Blog-FX.Com

At the Forex currency market Swiss Franc rate maintains stability on Friday morning, which seems everlasting and boringly predictable. On the one hand, stability of the Franc is based on the aggressive policy of the Swiss national Bank, on the other hand, on the investors’ wait and see attitude. If tonight’s conference of the U.S. Federal Reserve in Jackson Hole disappoints investors, demand in Franc will rise.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going up, shaping a buy signal, while volume are low. Stochastic Oscillator is moving sideways in the neutral zone and is not giving any signals.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7960, the pair USD/CHF will go to 0.7970 and 0.7970. If upward breakdown does not take place, the pair will consolidate close to the current levels.

On Friday, investors will be interested in leading indicators index KOF in Switzerland in August.

According to the data released yesterday,  index of economic expectations ZEW fell to -71.4 points in August against the previous level of -58.9 points.

In general economic situation in Switzerland remains unchanged. There is still high risk that SNB will intervene into the currencies trading once again to prevent Franc’s strengthening.

It became known earlier 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. 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.

Authorities of the country stated earlier 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 pour 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. Weighty argument of the SNB was that there is a threat to economic development and price stability.

Tags: