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The Swiss KOF Economic Barometer is a leading indicator which measures overall economic activity and is an excellent indicator of the direction of the Swiss economy. The indicator, which is released monthly, has a major effect on the USD/CHF. A reading which is higher than predicted is bearish for the dollar.

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

Published on Wednesday at  10:30 GMT.

Indicator Background

The KOF Economic Barometer is based on 12 economic indicators, and provides important data to analysts trying to predict the direction of the Swiss economy for the next six months.

In October, the index dipped to 0.80, well below the forecast of 1.00. The index has now been in freefall for five straight months. The markets are predicting an even lower reading for November of just 0.66. Will this alarming nosedive continue?

Sentiments and levels

The Swiss economy is expected to dip into a recession in 2012, and economic indicators, such as consumer confidence and retail sales, are down. At the same time, the dollar has been in retreat as of late. So, the overall sentiment is neutral on USD/CHF towards this release.

Technical levels, from top to bottom:   0.9370, 0.93, 0.9262, 0.9224, 0.9206, 0.9182 and 0.9089.

5 Scenarios

  1. Within expectations: 0.61 to 0.71: In such a case, USD/CHF is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.72 to 0.78: An unexpected higher reading can send the pair well below on support level.
  3. Well above expectations: Above 0.78: The chances of such a scenario are low. Such an outcome would prop up the Swiss franc, and a second support line might be broken as a result.
  4. Below expectations: 0.54 to 0.60: A lower reading than forecast could push the pair higher and break one level of resistance.
  5. Well below expectations: Under 0.54: In this scenario, USD/CHF will rise and could break two or more levels of resistance.

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

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