Swiss Franc Outlook – September 14-19 2009

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The Swiss Franc has been one of the currencies that most enjoyed the dollar’s big fall last week. Together with the very crowded week ahead, the Swissy sure is worth to watch. Here’s an outlook for 5 key events and a technical analysis for USD/CHF.

USD/CHF forex chart with support and resistance lines

USD/CHF Breakout

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:

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

10 Comments

  1. Agree with the SNB, they will try to keep the franc under a certain level for sure. I’m looking forward to a bounce back up.

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  3. Ifeanyichukwu on

    From my personal analysis GPBUSD, EURUSD, will have a very strong downtrend this week starting from 12GMT Morning .Then USDCAD will as well bullish staring from the same time i strongly advice all traders to watch the trade from this time zone.

    [email protected]

  4. Ifeanyichukwu , thanks for your comment. 12 GMT is indeed an important hour – the beginning of the New York session. Currently the dollar already began strengthening against other currencies.

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  8. Ifeanyichukwu on

    From my anaylisis GBPUSD,.EURUSD,AUDJPY,AUDUSD, will bearish from 12.00GMT Then USDCAD Will as well bullish at the same time zone here in Nigeria.
    Keep watch and see what is going to happen.
    I wish all a succefull trading today.

    e-mail…[email protected]

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