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At the Forex currency market Swiss Franc rate moves away from historic highs on Thursday morning, in a large extent due to verbal intervention by the representatives of Swiss monetary authorities.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal. Stochastic Oscillator tends to come out of the oversold zone and is going to shape a buy signal.

Forex recommendations: in case of breakdown at the level of 0.7315, the pair USD/CHF will go to 0.7330 and to new highs of 0.7360. If upward breakdown does not take place, the pair will consolidate at the current levels. High oversold level is being observed at the moment.
According to the representative of SNB Mr. Jordan, Central Bank of the country is prepared to take proactive measures to maintain financial stability in the market; however the issue of the interest rate increase is not going to be discussed at the moment. In addition, short- term risks to price stability have a downward trend.

At the same time Mr Dantin stressed that Franc is still significantly overvalued; however the idea of pegging of Franc to the USD is difficult to implement, and therefore is not feasible at the moment.

According to Dantin, present accommodative policy is completely justified.
 
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.

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.

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.

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