USD/CHF: Trading the Swiss Retail Sales April 2012

Swiss  Retail Sales is considered one of the most important indicators of consumer spending. The indicator’s release in the first week of the month provides analysts and traders with their first look at consumer spending for the previous month. A reading that is higher than the market forecast is bearish for the US dollar.

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

Published on Monday at 7:15 GMT.

Indicator Background

Consumer spending is one of the most important components of the economy, and strong numbers in this sector signify growth and a stronger economy.

The Retail Sales indicator sparkled in March, jumping 4.4%. This was the indicator’s best reading since August 2011. The market forecast for April calls for a increase of 3.2%. This would also be a strong performance, so if the indicator can meet or beat the forecast, the franc could respond favorably.

Sentiments and levels

USD/CHF continues to trade in  a narrow range,  around the 0.90 level.    Traders have been favoring the US dollar and Japanese yen, which are considered safe haven currencies. At the same time, with the improving US economy, traders have started to focus more on fundamentals such as economic growth and short-term interest rates. With slow economic growth and low interest rates, this could take some of the shine off the US dollar. Thus, the overall sentiment is  neutral on USD/CHF towards this release.

Technical levels, from top to bottom: 0.9204, 0.9120, 0.9050, 0.8924, 0.8850 and 0.8768.

5 Scenarios

1. Within expectations: 2.8% to 3.6%: In such a case, the  franc is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 3.7% to 4.1%: An unexpected higher reading can send USD/CHF  below one support level.
3. Well above expectations: Above 4.2%: Such an outcome would  push the pair upwards, and a second  support level  might be broken as a result.
4. Below expectations: 2.3% to 2.7%: A  weak reading  could push USD/CHF  above one resistance line.
5. Well below expectations: Below 2.3%: In this scenario, the  pair could break a second resistance line.

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