Daily Economic Commentary: Switzerland

[PipDiddy]

That’s 2-0 in favor of the franc bears! For the second day in a row the franc got clobbered on the charts last Friday on another round of risk appetite in markets. USD/CHF tacked on another 144-pip gain at .7775, while EUR/CHF also rose by 221 pips to 1.1080.

Though the SNB hotshots took a break from their jawboning last Friday, the markets hadn’t quite forgotten their actions early in the week. As it turned out, the possibility of a peg against the euro, lower SNB interest rates, and more bank deposits were just too convenient a time for the franc investors take some profits amid the burst of risk appetite in markets.

No biggies coming out from Switzerland this week with only the PPI report at 7:15 am GMT scheduled for release. Still, keep your eyes peeled for any surprises from the SNB, aight? If the franc pares its losses and continues to make new highs against its counterparts, then we just might see more of the tricks up the SNB’s sleeves!

[PipDiddy]

Even though USD/CHF gapped higher over the weekend, the pair was able to make quite a turnaround when it came close to the .8000 mark. From there, the pair retreated by almost 150 pips when it closed at .7856. What's been driving the Swissy lately?

The Swiss franc climbed all the way up to a high of .7998 during the London session when news broke out that the SNB could come up with a way to limit franc strength. It didn't help that there was already ongoing speculation that the central bank would peg the value of the franc to the euro. After all, Swiss economic authorities are getting increasingly worried that their currency's appreciation could eventually hurt their export industry and spur deflation.

Proving just that was the Swiss PPI report released yesterday, which showed that input prices fell by 0.7% in July, worse than the expected 0.5% drop. Declining producer prices typically lead to a drop in overall inflation.

Switzerland won't be releasing any economic data today so keep your eyes and ears peeled for any SNB attempts to stop the Swissy from rallying.

[PipDiddy]

More losses for the Swiss franc! For the fourth straight day, the safe haven currency weakened against the dollar and the euro as it continues to be bogged down by the threat of an SNB intervention. Will it continue to slide today?

Well, we'll find out soon enough as Switzerland's leaders will be meeting today to talk specifically about the franc! The Swiss government is set to discuss the franc's recent appreciation in a meeting sometime today. Rumor has it that the government might finally set a floor for the EUR/CHF and peg the franc to the euro as many franc bulls had feared.

In any case, you'd best stay on your toes today as we could be in for another wild ride on the Swissy train. If word gets out that the SNB is planning to push through with pegging the franc, it could very well lead to another sharp selloff.

[PipDiddy]

Fail! No matter how hard it tried, the SNB was unable to keep the franc from rallying yesterday. USD/CHF found resistance at the .8000 area and dropped by almost a couple hundred pips before closing at .7890. Meanwhile, EUR/CHF ended 10 pips below the 1.1400 handle. Will the SNB make another attempt to hold down the franc today?

"Try and try again" seems to be the motto of the SNB as it launched another attempt to pull down the Swiss franc. However, their attempt failed miserably since they didn't say anything about their plans to peg their currency to the euro. Market participants were disappointed to find out that there wasn't much progress yet and that the SNB would resort to its usual expansion of franc deposits.

In terms of economic data, Switzerland's calendar is empty today, just as it was yesterday. With that, better keep your eyes and ears peeled for more verbal jawboning from the Swiss central bank. Good luck trading, fellas!

[PipDiddy]

The Swissy pretty much gave as much as it got yesterday, chalking up mixed results against its major counterparts. While USD/CHF inched 42 pips higher, EUR/CHF slid down 19 pips. Will it get more consistent results today?

The markets experienced a bit of risk aversion yesterday, as evidenced by the drop in equities and commodities. But surprisingly enough, the Swissy wasn't the currency of choice among traders, as it had been in the past. Instead, the dollar was one of yesterday's biggest gainers.

It seems the threat of an intervention from the Swiss National Bank has been successful in keeping Swissy bulls at bay. It certainly did well to limit the Swissy's appreciation yesterday.

For today, it looks as though we'll have to trade according to risk sentiment since Switzerland won't be publishing any reports. Y'all know the drill. If risk sentiment turns sour, expect Swissy power!

[PipDiddy]

Can you say, RANGE? For all of last week, the Swissy stayed within a range of 200 pips between .7800 and .8000. What could cause the pair to break out of this consolidation?

Could it be trade balance figures, which are scheduled to come out tomorrow? Perhaps if the report prints a figure way worse than the anticipated 1.83 billion CHF surplus, it could send USD/CHF soaring above the .8000 handle.

Or could it be employment data, which will hit the airwaves on Thursday? Word is that Swiss employment will come in at 4.11 million, the same as the previous quarter.

Maybe we’ll see consolidation until the end of the week, when the KOF Economic Barometer index is released. Take note that this is a high impact event, so it could prove to be the catalyst to bust USD/CHF out of its range!

In any case, just stay on your toes and be ready for a breakout! You never know, our buddies over at the SNB might just open their mouths and rock the markets!

[PipDiddy]

Dojis, dojis everywhere! Trading the Swissy was an absolute bore yesterday as it remained flat against its two major counterparts. USD/CHF finished hardly unchanged at .7898 just as EUR/CHF finished 8 pips lower at 1.1344.

The only report on tap for today is the monthly trade balance report. Expect to see Switzerland's surplus expand from 1.77 billion CHF to 1.83 billion CHF.

Aside from a better-than-expected figure from the aforementioned trade balance report, we could see a Swissy rally as a result of risk aversion in anticipation of the Jackson Hole meeting on Friday. A lot of questions will remain unanswered until then, and this could lead to safe haven flows in favor of the Swissy. However, keep in mind that the threat of a Swissy-euro peg still remains, and could limit and gains in the Swiss currency.

[PipDiddy]

Ranging, ranging, ranging! That’s all what franc pairs have been doing lately! Once again, USD/CHF traded within a tight consolidation of just 80 pips, as traders are unsure what to do with the pair. Will we finally see a breakout today?


Chances are no… UNLESS of course, the SNB decides to intervene in the markets. After all, it’s been the threat of SNB intervention that has kept franc trading subdued over the past week. While there is still a lot of tension in the markets, traders are afraid to keep buying up the franc.


For the meantime, all you Swissy traders just be patient and once you see a breakout of the consolidation, make sure you’re ready for some wild moves!

[PipDiddy]

Whoa! Even the mighty Swissy was no match for the dollar in yesterday's trading! USD/CHF closed higher for the third consecutive day in a row, ending the day 33 pips above its opening price at .7950. EUR/CHF also continued its uptrend, finding support at 1.1400 and closing at 1.1463.

Some market junkies believe that the Swissy's losses could be because traders aren't so pessimistic about the global economy as they were before.

With that said, make sure you get a good feel of market sentiment before you decide to play the Swissy. Keep in mind that the currency usually rallies when risk aversion picks up.

Aside from that, keep tabs on the reports we have from Switzerland today. At 7:15 am GMT, the employment report for Q2 2011 will be released and it is expected to show that the number of employed people remained steady at 4.11 million, matching the figure for Q1 2011.

Then at 9 am GMT, the ZEW economic expectations report for August will be released. Watch out for a figure better than the -58.9 reading we saw for July as this would indicate an improvement in consumer sentiment and may consequently be bullish for the Swissy.

[PipDiddy]

Hmph! Data schmata! Despite a negative report, the Swissy was still able to end yesterday's trading with a win against most of its counterparts. USD/CHF ended the day 26 pips lower at .7925, while EUR/CHF was down 63 pips for the day at 1.1401.

The ZEW Economic Expectations report for August showed further pessimism among investors when it printed lower at -71.4 than July's -58.9 reading. But as I said, it seemed like it didn't keep the Swissy from kicking butt in yesterday's trading. Perhaps traders were already reducing their risks ahead of the much-anticipated Jackson Hole Symposium.

For today, we also have another high-caliber report from Switzerland on tap later at 9:30 am GMT. The KOF Economic Barometer for August is seen to come in at 1.84 but a worse than expected figure may give investors enough reason to flee the Swissy as this would indicate that economic growth could slow in the next few months.

Make sure you don't miss that and also remember to keep tabs on market sentiment if you're planning to trade the Swissy!