The Swiss National Bank (SNB) left the Libor Rate unchanged at 0.25% and while they said they would do “everything” to keep price stability, they said that the economic growth and the demand for Swiss exports – hinting that another intervention in the forex markets is unlikely soon.

In the past, the SNB intervened to keep the EUR/CHF value above 1.50. When this level was breached, the SNB made small interventions to stop it from deteriorating quickly. This was usually done on Friday mornings.

But after the recent European turmoil in May that led to a breach of 1.40, the seemed rather reluctant. The rather-new head of the SNB, Philipp Hildebrand, has taken a slightly different approach than Jean-Pierre Roth, his predecessor.

Switzerland is in an excellent situation, also in football / soccer (stunned Spain), and the central bank now acknowledges it and lets the currency appreciate. It seems that they settle for verbal intervention, and the markets don’t buy their words.

The Swissy’s strength is also due to its renewed status as a safe haven currency. As an island in the middle of the troubled Euro-zone, and with the troubles in Japan, the Swiss Franc is now standing closer to the US dollar in the safe haven club.

Will EUR/CHF reach new record lows? It now depends more on the Euro and especially on Spain.

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In Switzerland, SNB Governing Board Chairman Philipp Hildebrand will speak about the central bank’s monetary policy during the crisis. Referring to interest rates and possibly currency interventions will probably move the Swiss Franc.

British inflation is expected ease this time: CPI is predicted to drop from 3.5% to 3.1% (annualized). This outcome will prove that Mervyn King’s dismissal of rising prices was correct, and that no rate hikes are necessary. Core CPI is expected to edge down to 3% and RPI (Retail Price Index), is expected to remain unchanged at 3.7%. And there’s more in Britain:

CBI Realized Sales,  a significant gauge of the economy as well, is expected to drop from 23 to 20 points, still a good score. For more on the British Pound, read the GBP/USD forecast.

In Canada, the Leading Index usually moves the loonie. It’s expected to rise by 1%, similar to last month’s 0.9% rise. See more about the Canadian dollar in the USD/CAD forecast.

In the US, Existing Home Sales are predicted to remain stable, with an insignificant drop from 5.05 to 5.01 million sales. This will shake the markets, whatever the outcome. A related figure, HPI (House Price Index), is expected to show a drop of 0.9%.

In Europe, Belgium’s NBB Business Climate is predicted to improve from -7 to -4.1 points. Many analysts are expect the Euro to test lower levels this week. I’m with them.

For more on the Euro, read the EUR/USD forecast, and Casey Stubbs’ latest analysis.

In New Zealand, Current Account is expected to show a bigger deficit – 1.6 instead of 1.4 billion. This usually moves the kiwi. The day ends with the Japanese Trade Balance which will probably show a smaller surplus than last month.

That’s it for today. Happy forex trading!

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The Swiss National Bank intervened again in the currency markets to weaken the national currency. Like in previous cases, USD/CHF jumped in minutes by about 150 pips, from 1.03 to 1.0450. Like in previous cases, this jump was short lived. USD/CHF is now back down to 1.0370. Looking at the near past once again, USD/CHF is going down.

Each intervention takes it up for short time. Later on, the pair falls down below the pre-intervention levels. I’ve already written that such interventions are a great trade opportunity. EUR/CHF

Switzerland has lots of trade with members of the European Union, including its two close neighbors: Germany and France. Both economic giants are the pillars of the EU. Data in both countries moves the Euro. A strong Euro is an interest of the SNB.

Swiss exports paid in Euros are worth more Swiss Franc after each intervention. This helps the Swiss economy. While the moves against the dollar fail, the moves against the Euro manage to keep it above a very specific line: 1.50. Each time that EUR/CHF drops towards this level, the bank intervenes and keeps it above the water.

The central bank doesn’t change the direction of the Swiss Franc against the Euro. It just safe guards it from reaching low levels. Since the big intervention on March 12th,EUR/CHF hasn’t fallen below 1.50.This number is a round number, but it has never served before as a support or resistance line. The SNB created it and is guarding it.

Although the dollar weakens, it doesn’t affect all currencies. Mervyn King sent the Pound down yesterday. On the other side of the channel, EUR/USD is continuing upwards. Casey Stubbs wrote a fresh technical analysis for EUR/USD.

Australia’s MI Leading Index started the day with a 1.1 rise, and last month’s figure was revised upwards.

In Switzerland, the strong Swiss Franc is expecting the Retail Sales publication. It’s expected to rise by 1%, after rising by 0.9% last month.Later on, the ZEW Economic Expectations are due.

For more on the Swissy, read the USD/CHF Outlook.

In Britain, the beaten Pound expects a major indicator today – Claimant Count Change. The rise in British unemployment claims is the earliest indicator of unemployment. After standing on 24.9K last month, it’s expected to stand on 24.7K this time.

British Unemployment Rate is expected to rise from 7.8% to 8%. Although this is a late figure, it’s quoted by the media and impacts policymakers. The Average Earnings Index is expected to rise by 2.1%, after a 2.5% rise last time.

For more on the British Pound, read the GBP/USD Outlook.

It’s Europe’s turn for CPI. It’s expected to decline by 0.2%, after the same fall last month. Core CPI is expected to rise only 1.2%, less than last month’s 1.3%.

For more on Euro’s week, read the EUR/USD Outlook.

In Canada, Manufacturing Sales are expected to rise by 2.4%, and might help the loonie. Read more on USD/CAD.

American Consumer Price Index is expected to rise by 0.3%, after being unchanged last time. Core CPI is expected to edge up by 0.1%, like last month.

TIC Long-Term Purchases, representing cash flow, are expected to squeeze from 90.7 to 65 billion. This usually moves the dollar across the board.

Also in the US: Current Account is predicted to show a smaller deficit this time, of “only” 92 billion. The Capacity Utilization Rate is expected to rise from 68.5% to 69.1%. Industrial Production is expected to rise by 0.7% after a 0.5% last month.

Japan closes the day with two figures: BSI Manufacturing Index and the Tertiary Industry Activity which is expected to rise by 0.6%, after a 0.1% rise last month.

That’s it for today. Happy forex trading!

The late dollar comeback that began late on Friday continues today. While the British Pound and the New Zealand dollar suffer, the Swissy and the Yen are weathering this strength.

In New Zealand, Retail Sales disappointed with a fall of 0.5%. A rise in the same scale was expected. Also Core Retail Sales were expected to post a nice rise but fell by 0.5% instead.

Swiss PPI met expectations and rose by 0.1%. This is the first rise in a long long time, and it helps the Swissy not to get carried away by the dollar’s strength.

For more on the Swiss Franc, read the USD/CHF Outlook.

In Europe, Industrial Production fell by 0.3%, exactly like last month and within expectations. Last month’s figure was revised upwards.

For more on the Euro’s week, check out the EUR/USD Outlook.

In Canada, Capacity Utilization Rate is expected to decline to 66%, from 69.3%. For more on the Canadian dollar, read the USD/CAD Outlook.

In the US, there are many speeches due today, but no economic indicators released: FOMC members Elizabeth Duke, Jeffrey Lacker and Janet Yellen will all speak in conferences.

President Barack Obama will speak about the financial crisis and might move the markets.

At night, RICS House Price Balance will be published in Britain and might help the Pound, which is falling now. For more on GBP/USD read the British Pound Outlook.

That’s it for today. Check out the Forex Weekly Outlook for the major events during the rest of the week.

USD/CHF forex chart with support and resistance lines

Last week’s better-than-expected unemployment rate helped the Swissy with it’s rally. This week features a new Libor Rate and other key indicators. Let’s review them:

1. PPI: In the past year, the Producer Price Index always fell below expectations. In the past two months, prices haven’t fallen, and that’s already a positive change. This time, prices are expected to rise by 0.1%. Published early in the week, on Monday at 7:15 GMT.
2. Industrial Production: Swiss Industrial Production is quite choppy. This quarterly figure fell by 13.1% last time, and this quarter its expected to leap by 7.6%. The figure includes the manufacturing production component. Published on Tuesday at 7:15 GMT.
3. Retail Sales: Swiss Retail Sales have grown last month, after falling the month before. This rather volatile figure has a strong impact on USD/CHF. It’s expected to rise again, this time by 1.1%. Published on Wednesday at 7:15 GMT.
4. ZEW Economic Expectations: This German institute surveys the Swiss industrialists as well. After a long period of pessimism (negative score), this indicator has been above the water in the past three months, scoring 18.6 points last time. Will optimism continue? We;ll know on Wednesday at 9:00 GMT.
5. Libor Rate: The best is kept for last – Swiss interest is unique – it’s published only once in three months, and is related to the London interest for the Swiss Franc. The target Libor rate has remained at 0.25% time, after declining from higher levels. It’s expected to remain at 0.25% also this time. The more interesting part of this event is the SNB Monetary Policy Assessment. The SNB lays out future plans, and sometimes declares market interventions. They want a weaker exchange rate for their currency, but the recent weakness of the dollar shows us again how central bank intervention is short lived. Published on Thursday at 12:00 GMT.

USD/CHF Technical Analysis

The Swiss Franc had an excellent week. Not only did it break the 1.0530 support line that it was hovering over for many weeks, it fell below 1.0369, which was a swing bottom in the height of the crisis, down o 1.0340. It finally closed slightly higher at 1.0383.

1.0369 serves as an initial support line.. Below that, the magical round number of 1, or parity, is the next support level. USD/CHF was at parity in July 2008.

Looking up, 1.0530 is the first resistance line. Further up, 1.07 and 1.09 served as minor support / resistance lines in the past.

SNB Intervention

The problem with the Swissy is the Swiss National Bank – SNB. They don’t hesitate to intervene in the markets to weaken their local currency. While this move has proven to be short lived, they still do it.

So, beware of such intervention! It will send USD/CHF jumping upwards unexpectedly. Afterwards, the move cannot hold for a long time – making such an intervention an opportunity.

All in all, it looks like the current bearish trend will continue, even if the SNB intervenes.

James Chen also wrote on the breakout of USD/CHF.

Further reading:

• For a broad overview of this week’s events, read the Forex Weekly Outlook.
• For a look on the Euro, read the EUR/USD Outlook.
• For the struggling British Pound, check out the GBP/USD Outlook.
• For the Canadian dollar, read the USD/CAD Outlook.

USD/ILS fell and fell, hurting Israeli exports, many of them to the US – the Israeli hi-tech industry. Stanley Fisher, Governor of the Bank of Israel, refused to let it happen, and began buying dollars early last week. While the dollar was collapsing in the world, it gained 4% against the Israeli shekel.

In my post Central Bank Intervention – the Israeli way, I argued that such an intervention can only work in small countries like Israel.

Well, this strong move can probably happen only in small countries, but it can’t last long. I then mentioned that in Switzerland, the SNB’s intervention was indeed short lived, and provided an opportunity to buy the Swiss Franc.

Fisher stops buying bucks

This week was different in Israel. Stanley Fisher stated that he’ll stop the regular policy of dollar buying, and only intervene from time to time. Traders on the USD/ILS saw this dramatic statement as a white flag on behalf of the central bank.

USD/ILS plunged from 3.93 back down to 3.79. It already traded lower during Friday’s session.

While Fisher and the Bank of Israel intervene in the markets much more frequently than in Western countries, also their power is very limited. So, the next time that Swiss and Japanese bankers think of intervening in the markets to weaken their national currencies, they should think twice…

USD/ILS is a currency pair that doesn’t receive high volumes or much attention. Israel is a small country that is still the center of an ongoing conflict. Despite the conflict, the economy is doing rather well.

In the past year and a half or so, the local currency, the New Israeli Shekel, was doing much better than the economy. It made gains against most currencies in the world. The “normal rate” for USD/ILS is around 4 shekels per dollar.

Last July, when EUR/USD was above 1.60, USD/ILS fell as low as 3.20. The Israeli central bank couldn’t seeing Israeli exports (especially hi-tech to the US) suffer, and began intervening on a regular daily basis. The dollar eventually went higher, but mostly due to it’s general strengthening worldwide.

This week’s collapse was met with even stronger resistance. Stanley Fisher, the governor of the Bank of Israel, intervened immediately, and sent the dollar from 3.77 to 3.93. He bought about 300 million dollar to make this happen, against the world trend. Naturally, EUR/ILS jumped even higher.

Yet again, the intervention wasn’t necessary after the dollar made a comeback on Friday.

In many interviews during the week, Fisher said that this policy of dollar buying couldn’t last forever, yet he said that he was willing to intervene yet again.

Contrary to big economies that enjoy high trading volumes on their currencies, this intervention will probably last. The “market forces” aren’t that strong in Israel.

In Switzerland, the SNB’s intervention was indeed short lived, and provided an opportunity to buy the Swiss Franc. In Israel, this move means that the shekel won’t bounce back. Someone is guarding it…

• Adam Kritzer dives into one of the strongest factors in the forex market: risk, and asks if risk aversion is back.
• Macro Man talks about ECB issues and also about the SNB intervention. Interesting and amusing as usual.
• Kathy Lien writes about the effect of the SNB intervention to weaken the Swiss Franc. I believe it’s short lived.
• Eric deCarbonnel is amazed by the correlation between US Secretaries of Treasury and gold prices. He concludes that the US Treasury is manipulating gold prices.
• James Chen, writes about throwbacks and pullbacks when currencies make breaks, in technical analysis.
• James W (from Forex Articles) explains the Triple Exponential Moving Average, or TEMA. He gives an example using the EUR/USD.
• Casey Stubbs reviews the most common forex price patterns.

That’s is. I hope you like the mix of macro-economic and technical articles. Have a great weekend!

The Swiss National Bank intervened in the forex market on March 12th in order to weaken the Swiss Franc. A weaker currency makes Switzerland’s export driven economy stronger. At first it worked: the Swissy plunged against the US dollar and against the Euro quite fast. Technical barriers were breached.

But this effect was short lived. A few days later, the Swissy became strong again. The market corrected itself. In a $4.5 trillion daily market, such interventions, even from very strong and influential institutions as the SNB, can’t last for a long time. This is one of the basic characteristics of the forex market. Influence and foul play – not in forex. The high volume in forex makes it impossible.

On Wednesday, June 24th at about 10:40 AM GMT, the SNB did it again. They intervened in the forex market, and sent USD/CHF from 1.0630 to 1.0980 at 11:40 GMT. Yes, it leaped 350 pips in one hour.

Since then, the pair strengthened a little and then weakened. At the time of writing, USD/CHF trades at 1.0940. Still high, and there’s enough room to go down.

I’m not saying it’ll dive back to 1.0630, but it sure does have lots of room to fall. A great trade opportunity indeed.

Such interventions will happen in the future. Remember that they are short lived, and that a correction is imminent.

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