USD/CHF: Trading the Swiss CPI

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The Swiss CPI, also known as inflation, measures the change in the price of goods and services charged to consumers. The indicator is released monthly, and has the potential to be a market-mover. A reading that exceeds the market forecast is bullish for the Swiss franc.

Here are all the details, and 5 possible outcomes for USD/CHF.

Published on Thursday at 8:15 GMT.

Indicator Background

The CPI is scrutinized carefully by investors and currency traders, since if inflation is on the rise, there is the possibility that the central bank may intervene and raise interest rates. Also, readings close to zero are an indication of weak economic activity.  

The February CPI reading came in at -0.4%, the fourth consecutive negative reading. The markets are predicting better news in March, with a forecast of a 0.2% rise. Will the index rebound and cross into positive territory this month?

Sentiments and levels

USD/CHF has been choppy, as the pair continues to vacillate in both directions. Although the US economy has been showing stronger signs of growth, while the Swiss economy is having trouble, the franc has enjoyed a strong 2012 so far against the dollar.  Thus, the overall sentiment is neutral on USD/CHF towards this release.

Technical levels, from top to bottom: 0.9306, 0.9250, 0.9204, 0.9120, 0.9050 and 0.8924.

5 Scenarios

  1. Within expectations:-0.1% to 0.5%: In this scenario, USD/CHF could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
  2. Above expectations: 0.6% to 0.9%: A reading above expectations would be an indication of greater inflation, and could push the pair below one support level.
  3. Well above expectations: Above 0.9%: An unexpectedly sharp rise in inflation would push USD/CHF downwards, andtwo or more support levels could fall.
  4. Below expectations: -0.5% to -0.2%: A reading in negative territory could push the pair upwards, with one resistance level at risk.
  5. Well below expectations: Below -0.5%: Such a reading would be bearish for the franc, and USD/CHF could break two or more resistance levels.

For more on USD/CHF, see the USD/CHF forecast.

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About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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