The SNB continues to be very active around the franc, but not all of its efforts are successful. The upcoming week consists of 4 important indicators. Here is an outlook for these indicators, and an updated technical analysis for USD/CHF.
The expectations from the SNB and also the actual moves, have a wide impact on the exchange rate with the greenback, as well as the euro, which enjoyed the moves in EUR/CHF.
- Trade Balance: Publication time unknown. Switzerland’s export oriented economy usually enjoys a surplus in the trade balance. After jumping above 3 billion francs two months ago, this surplus squeezed to 1.75 billion last month. It will likely tick up to around 2 billion this time.
- Employment Level: Publication time unknown at the moment. The number of employees stood on 4.11 million in Q1, gradually edging higher quarter over quarter. Given the dropping unemployment rate, another small rise is expected now.
- ZEW Economic Expectations: Thursday, 9:00. The highly regarded German institute has show a quick deterioration in economic expectations. The score turned negative 3 months ago, and continued falling – meaning growing pessimism. A small rise is expected from last month’s -58.9 points.
- KOF Economic Barometer: Friday, 9:30. This local economic research institute has also shown some drop in activity in the past two months, with the score dropping from a high level of 2.30 to 2.04. A drop under 2 is likely now, to 1.86 points. The indicator is actually a combination of 12 different figures.
* All times are GMT.
USD/CHF Technical Analysis
Dollar/Swiss began the week with a gap higher, and was quite range bound. The round number of 0.80 (discussed last week) proved to be strong cap.
Technical lines, from top to bottom:
The already ancient all time low of 0.8275 proved to be a strong line of resistance after it was broken, and before the collapse. It is followed by 0.82, which managed to cap a recovery attempt recently, and worked as a pivotal line . This round number is minor now.
0.8130 is a minor line below. We’ve seen it work perfectly well as support, serving as the bottom border of the range before the last drop. The previous record low of 0.8075 is now resistance, quite a minor one.
The round number of 0.80 continues to be of high importance. After it was lost, the pair recently tried to break above it, but wasn’t able to do so.. 0.7925 is a minor line that worked as weak support just now.
0.7850 worked perfectly well as support just now, after having the opposite role beforehand. 0.78 proved to be a line of resistance after the dive lower. The pair got close to this line before recovering.
0.77 is another round number and a pivotal line. It’s importance is greater now – the pair struggled around this line that slowed down its recovery. 0.7625 was a place where the pair found support. It is of minor importance now.
The previous all time low of 0.7575 is worked again as support after the recovery. It was an all time low very recently. It is followed by the round number of 0.75, which is only minor support.
0.7330 provided some support on the way down and later capped the pair before the great recovery. Further below, 0.7250 is another line of support, followed by 0.72.
The new all time low of 0.7067is the final frontier before the next big round number of 0.7000.
I remain neutral on USD/CHF.
The SNB’s efforts to weaken the franc are very serious this time, but with growing fears of a global credit crunch, especially in Europe some investors prefer getting punished with negative interest rates in order to hold the franc. These forces will likely continue their battle.
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- For the New Zealanddollar (kiwi), read the NZD forecast.
- For USD/CAD (loonie), check out the Canadian dollar