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The Swiss KOF Economic Barometer is a composite leading indicator which measures overall economic activity and is an excellent indicator of the direction of the Swiss economy. Its publication has a major effect on USD/CHF.

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

Published on Wednesday at 9:30 GMT.

Indicator Background

The KOF Economic Barometer is an important indicator of projected of GDP growth. The index has been on a steady downward trend since May. It dropped sharply from 2.23 in June to 2.04 in July. The index has been above 2.00 since April of 2010. This is likely to change, however, with an August forecast of just 1.86.

Sentiments and levels

This  index is forecasting a sharp decrease in August,  which will likely be bad news for the Swiss franc. In addition, many currency analysts feel that the CHF is greatly overvalued, which could hurt the growth of the Swiss economy.  So, the overall sentiment is bearish on USD/CHF towards this release.

Technical levels, from top to bottom:    .8075, .8000, .7925, .7850, .7800, .7700.

5 Scenarios

  1. Within expectations: 1.80 to 1.93: In such a case, the CHF is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 1.94 to 2.03: An unexpected higher reading can send USD/CHF well below one support line.
  3. Well above expectations: Above 2.04: The chances of such a scenario are low. Such an outcome would prop up the CHF, and a second support line might be broken as a result with Dollar/Swiss.
  4. Below expectations: 1.73 to 1.79: A sharper decrease than forecast could cause the CHF to drift, with USD/CHF breaking higher.
  5. Well below expectations: Under 1.73: Due to concerns over a greatly overvalued Swiss franc and the sluggish Euro zone economies, a sharp decline cannot be ruled out. In this scenario, the CHF will fall and the Dollar/Swiss pair could break below a second level of support or more.

For more about the Swiss Franc, see the  USD to CHF  forecast.