Daily Economic Commentary: Switzerland

[PipDiddy]

“I'm on the.. top of the pip-world looking…down on price action and the only explanation I can find…is the haven that markets found ever since risk has been around..” The franc did a Carpenters number yesterday after market uncertainty pushed the safe-haven currencies to record highs. EURCHF closed near its intraday low at 1.2866, while USDCHF dropped by 109 pips to a 1.0153 closing price.

Risk aversion might have boosted the franc yesterday, but the better-than-expected consumption data from Switzerland could have also sweetened the deal for the franc when it printed at a 1.86 from last June’s 1.80 index figure.

Will the good times roll for the franc today? Only the SVME PMI report at 7:30 am GMT is scheduled for a spotlight. The data is expected to decrease to 65.9 from July’s 66.9 number, but a higher figure could push the franc into new highs against its major counterparts.

[PipDiddy]

What do you get when you mix poor economic data with renewed risk appetite? A weak Swissy! While USDCHF unmoved from its opening price of 1.0154, EURCHF rose 129 pips to land at 1.2996 at the end of the New York session.

The Swissy may have hit parity with the dollar, but it was mostly because of dollar weakness rather than Swissy strength. Its story against the euro was much different. Its drop against the euro began when it August posted a reading of 61.4 in its manufacturing PMI report. Investors must have been turned off by this figure, especially since most were expecting to see a 65.8 after the previous month posted a 66.9.

Will we see the Swissy fight back today? At 5:45 am GMT, Switzerland will be unveiling its quarterly GDP figures. Analysts are expecting growth to slow slightly from 1.0% to 0.8% in Q2 2010. Let’s see if an upside surprise can give the Swissy a boost!

Then at 7:15 am GMT, Switzerland will roll out its latest retail sales report, which is forecasted to print a 0.9% year-on-year growth in July following the 1.0% uptick in June. As usual, watch for better-than-expected results as they are usually bullish for the currency. Good luck out there, folks!

[PipDiddy]

Price action on USDCHF yesterday saw the franc complete its trifecta against its American counterpart. The pair inched closer to parity as it raced down the charts upon the release of positive Swiss data. Eventually, it rested 21 pips lower for the day at 1.0128, but not before hitting an intraday low of 1.0096.

Switzerland made up for the weak manufacturing PMI figures it posted this Wednesday by publishing two awesome reports.

First off, GDP for Q2 2010 grew 0.9% to surpass forecasts for a 0.8% expansion. Analysts were so impressed by the latest figures, they were prompted to revise the previous quarter’s results up from 0.9% to 1.0%.

Further bolstering the franc’s strength was the retail sales report for July. According to the latest numbers, consumers spent 4.8% more year-on-year, compared to just 1.0% the previous month. More franc buying ensued when the results came out because most were only expecting to see a 0.9% uptick. Talk about raising the bar!

Today we’ll find out if the franc has what it takes to end the week on top as Switzerland is set to unveil its August CPI figures at 7:15 am GMT. If results come in better than expected, the franc might just secure its reign over the Greenback. Don’t miss it!

[PipDiddy]

Chop chop! USDCHF sliced through the charts last Friday as the US employment report allowed the pair to rally to a high of 1.0239. After reaching that level, USDCHF made a quick about-face and dropped towards the 1.0150 area.

At first, the US dollar outpaced the Swiss franc when the NFP report showed that the increase in unemployment was smaller than expected. However, the dollar was forced to give back its gains when the ISM non-manufacturing PMI came in below expectations and hinted that joblessness could continue to increase in the future.

Earlier that day, Switzerland reported that inflation stayed flat in August, better than the 0.7% decline in price levels seen last July. However, the August figure came in below consensus of a 0.1% uptick, confirming that inflationary pressures are still weak.

The only report due from Switzerland this week is its unemployment rate, which is set for release tomorrow 5:45 am GMT. The report could show that the unemployment rate fell from 3.8% to 3.7% in August, reflecting a slight improvement in Switzerland's labor situation.

[PipDiddy]

Yawn... USDCHF was off to a slow start yesterday as it consolidated right above the 1.0150 area. Later on, the Swissy jumped into action and outpaced the Greenback, pushing USDCHF to a low of 1.0109.

Today, USDCHF price action is bound to be a little more exciting as most traders return fresh from their Labor Day holiday. Aside from that, Switzerland is set to release its unemployment rate at 5:45 am GMT. The report is expected to show that joblessness fell from 3.8% to 3.7% in August. If the actual figure meets expectations, it would mark the indicator's third consecutive monthly drop, reflecting a continuous improvement in Switzerland's labor market. Would this report be enough to bring the Swissy in parity with the Greenback? Stay tuned!

[PipDiddy]

The Swissy was like a rock yesterday as it held strong and refused to budge against its two biggest rivals. USDCHF closed at 1.0100 at the end of the day to record a 26-pip plunge. On the other hand, EURCHF had a more drastic drop as it fell 218 pips from its opening price of 1.3037.

Switzerland published its July unemployment rate yesterday and printed a 3.6%. No surprises there! Analysts correctly predicted it would stay flat after June printed a rate of 3.6%.

I bet you’re wondering, “So what could have caused the Swissy to beef up so much?” Well, do the words “risk aversion” ring any bells? After questions arose regarding the reliability of the euro zone’s stress tests, investors flocked back into the arms of the safe haven currencies.

No reports on tap from Switzerland today. In the meantime, keep risk sentiment in check because it seems to be driving the markets lately. More gains could be in store for the Swissy if risk aversion stays strong. Good luck, folks!

[PipDiddy]

EURCHF hit a new low, low, low, low, low during yesterday’s trading at 1.2766. Too bad the Swissy wasn’t able to hold on to its gains no thanks to risk appetite. The pair closed 47 pips higher at 1.2866.

We don’t have anything on tap for the currency for the rest of the week. So watch out make sure you gauge the market’s risk sentiment before you enter in your Swissy trades!

[PipDiddy]

Oh, how the mighty have fallen! After an impressive performance earlier this week, it seems that the largely oversbought Swissy is starting to retrace its gains across the board. It is currently trading above the 1.0200 handle against the Greenback and above 1.2900 versus the euro.

Is this the work of simple profit taking or are we seeing a change in perception towards the Swissy? The fundamentals have not changed, so this move we are seeing could merely be a pullback. In other words, another chance to buy the Swissy at cheaper prices!

There is also nothing on Switzerland's economic cupboard today, so watch out for those important support and resistance technical levels to hold!

[PipDiddy]

With risk appetite large and in charge, the Swiss franc sold off faster than Lady Gaga concert tickets! USDCHF flew from its opening price of 1.0153 to hit an intraday high of 1.0279, while EURCHF marked a 63-pip gain for the day.

With no releases coming from Switzerland and the US last Friday, it seems markets were still chewing on the positive US trade balance and unemployment claims figures last Thursday. And let’s not forget about the improved risk appetite that pushed investors to sell-off the safe haven franc!

This week, we have a few Swiss events to look forward to.

On Wednesday, ZEW is set to publish its September economic expectations report. It’s interesting to see what institutional analysts and investors have to say about Switzerland’s future economic conditions. Will the survey result in a reading higher than August’s 9.1? Or has the economy’s economic health deteriorated so much that investors have become pessimistic? Tune it at 9:00 am GMT to find out!

Then at 12:00 pm GMT on Thursday, Switzerland brings out the big guns with its SNB monetary policy assessment. Don’t blink while watching this report, kiddos! The central bank might just slip and give us clues about what they plan to do in the future while they talk about current economic conditions.

At the same time, the SNB is supposed to announce the new London interest rate for three-month Swiss franc deposits. Though it’s widely expected that rates will stay pegged at 0.25%, you ought to stay on your toes. You never know what the SNB has in store for us!

[PipDiddy]

Do you smell what the Swissy’s cookin’? The currency was finally able to break its three-day losing streak against the euro when EURCHF closed 14 pips lower at 1.2969. Boo yeah! Against the dollar, it claimed another day of piptory as USDCHF closed 124 pips lower yesterday.

I have a feeling that a combo of risk appetite and lower-than-expected Swiss data kept the franc from snatching more pips from the euro. Yesterday we saw that producer and import prices only grew by a puny 0.1% in August when the market had been expecting a 0.3% increase. Tsk, tsk…

On the brighter side of things, Switzerland’s relatively sunnier economy compared to that of the US, might have allowed it to rally against the dollar.

We don’t have anything on tap for the Swissy today so make sure you gauge the market’s risk sentiment before you enter in your Swissy trades. Remember, risk aversion is usually bullish for the currency.

Tomorrow we have the Credit Suisse ZEW Survey at 9:00 am GMT to look forward to ahead of the SNB monetary announcement on Thursday. A figure higher than that of July’s 9.1 reading may help the Swissy rally as this would indicate that investors and analysts are growing more optimistic on the Swiss economy.