Critial Week in the Swissy

The Libor Rate decision makes this week critical in the direction of the Swiss Franc. Add three more major indicators: PPI, Industrial Production and Retail Sales, and add a close and critical technical support line, and you have a recipe for excitement. Swiss Franc outlook.

1. PPI: Producer Price Index isn’t as significant as Consumer Price Index (CPI), but the timing plays a big role here – it’s released on Monday at 7:15 GMT, very early in the forex trading week. It’s expected to rise by 0.1%, and any surprise will shake the Swissy.
2. Industrial Production: This is a quarterly figure in Switzerland. This time, economists put their head in their hands – a plunge of 11.7% (!) is expected. Last time production went up by 0.1%. If this devastating prediction comes true, watch for a rise in USD/CHF. It’s release on Tuesday at 7:15 GMT.
3. Retail Sales: After the bad forecast, there’s an optimistic one for Swiss retail sales – a rise of 0.5%. Lat time it made a surprise, and rose by 1.2%. It’s published on Wednesday at 7:15 GMT.
4. Libor Rate: The country in the Alps is unique with it’s interest rate. The rate is a target rate that’s published once in three months. It’s also unique by the correlation to the Libor rate in London. No change in expected by the SNB. So, the real event is the  SNB Monetary Policy Assessment, in which a broad view of the Swiss economy is presented, and an outlook for future interest rate moves is released. Still confused? The  SNB Press Conference might supply answers.

Last time, the SNB declared a “forex war” – by announcing that the Swiss Franc was too high. They intervened in the forex market in order to weaken the Swiss Franc. Their move had a short-term impact. Future events strengthened the Swissy…

USD/CHF Technical Outlook

The Swissy began the week with a nice rise, and almost reached 1.10. Afterwards, the dollar weakened and the pair fell as low as 1.0650. Eventually, the pair strengthened and closed at 1.0789. All in all, USD/CHF fell by about 60 pips.

Looking up, 1.0860 serves as a minor resistance line. USD/CHF failed to break it during last week. It happened three times…Higher, 1.10, the round number, served twice as a resistance line, and beforehand served as a support line. So, 1.10 is very important.

Looking down, 1.06 is a very important support line. USD/CHF stopped their when falling recently, and also when falling at the beginning of the year.

Personal note: I don’t like the Swissy. I find it to be quite a boring pair, with few economic indicators, and not much action. Well, cold like the weather…I recently wrote how the Swissy should be dismissed from the club of major pairs, and let the Aussie become a major.

But on such a week, I must admit that the Swissy is interesting…

For further reading:

• A coverage of this week in the British Pound.
• A coverage on the  Canadian dollar.
• A broad view of this week’s events:  Forex Weekly Outlook.

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