Daily Economic Commentary: Switzerland

[PipDiddy]

There goes Wednesday's gains! The Swiss franc gave up ground against its major counterparts yesterday as weak economic data dragged it down. When all was said and done, USD/CHF closed 26 pips higher at .9215 while EUR/CHF finished 25 pips higher at 1.2408.

The ZEW economic expectations report turned out to be a dud for the franc as the index dipped from -54.4 to -64.3. Not only are the Swiss NOT hopeful for the economy in the coming six months, but the survey shows that they're even more pessimistic than they were before!

For those of you planning to trade the Swiss franc today, take note of the critical resistance levels on USD/CHF and EUR/CHF. They could make or break the franc, so stay on your toes!

[PipDiddy]

When risk appetite shoots up you just know that the low-yielding franc is in for a fall! A burst of risk appetite took its toll on the franc last Friday, limiting EUR/CHF’s losses to only 8 pips at 1.2400, while USD/CHF also climbed from its intraday low of .9085 and finished the day at .9174.

Like the other major economies, Switzerland’s economic board was empty last Friday. But remember that it didn’t stop the franc bulls and bears from trading the currency!

This week we’ll only see Switzerland’s trade balance report tomorrow at 7:00 am GMT and the country’s employment level scheduled for release on Thursday, so make sure you always got one eye on risk appetite! We never know when a market-moving news report shakes up the markets!

Finish your school, kids! Your School of Pipsology, that is.

[PipDiddy]

As risk aversion dominated in the markets, the safe-haven U.S. dollar and Swiss franc battled it out on the charts. Because it was a close fight, USD/CHF moved sideways the entire day as it found support around .9150 and resistance at .9200. Will this pair break out of its range today?

Switzerland didn't release any economic data yesterday, which meant that the Swissy was pushed around by market sentiment. Downbeat news from the euro zone and the U.S. dampened demand for riskier currencies and forced traders to flee to the safe-havens, such as the Greenback and Swiss franc.

Switzerland is set to report its trade balance today, which means that USD/CHF could have a chance to make strong moves. The report could show that the surplus widened from 1.91 billion CHF to 2.06 billion CHF in October, reflecting stronger export activity in the country. A higher than expected surplus could provide a boost for the Swissy, which could push USD/CHF out of consolidation. Stay on your toes!

[PipDiddy]

Just like the Twilight Saga: Breaking Dawn fangirls, the currency bulls still hasn’t gotten enough of the low-yielding franc. EUR/CHF ended up falling by another 22 pips at 1.2352, while USD/CHF dropped by dropped by another 23 pips to .9141.

Of course, it didn’t hurt the franc that Switzerland printed a trade surplus of 2.15 billion CHF in October, a bit higher than the 1.91 billion CHF surplus in September.

Too bad the franc traders will have to wait till Thursday to get their hands on more Swiss reports! No data is scheduled for release today, but make sure you got your eyes on any economic report that might affect risk appetite!

[PipDiddy]

Ooh, that burns! The Swiss franc's latest gains were snatched back by the U.S. dollar yesterday, forcing USD/CHF to close 60 pips up from its .9141 open price. Good thing the Swissy was able to end up positive against the euro as EUR/CHF ended 17 pips below the 1.2300 handle.

There weren't any reports released from Switzerland yesterday but the disappointing German bond auctions enabled the Swiss franc to take advantage of euro weakness. Tune in to my euro zone economic commentary to see how it all turned out!

On the economic front, the coast is clear for Switzerland, which means that Swissy pairs will have to rely on market sentiment for direction. Make sure you keep close tabs on what's going on in the euro zone since their debt situation is hogging the spotlight lately. Also keep in mind that most traders are off on their Thanksgiving holidays for the rest of the week, so stay on your toes for low liquidity and high volatility!

[PipDiddy]

Sideways, shmideways. Due to the absence of high profile economic releases, the Swissy mainly traded in a range yesterday. USD/CHF, for instance, traded within a tight 60-pip box with support at .9160 and resistance around .9210. The pair closed the U.S. trading session .9194, barely changed from its opening price that day.

The Swissy's sideways movement will probably continue today as the economic calendar no catalysts. There are no important reports coming out not only for Switzerland, but for other major economies as well.

[PipDiddy]

Along with its fellow European currencies, the Swiss franc tumbled when several euro zone nations' credit ratings got downgraded last Friday. USD/CHF closed 115 pips up from its .9194 open price after hitting a high of .9331. EUR/CHF ended 47 pips up from its 1.2270 day open price.

There aren't any economic reports on Switzerland's schedule for today, which means that risk sentiment could once again dictate where the Swissy is headed. On Tuesday, Switzerland will release its UBS consumption indicator for October. Recall that the index climbed from 0.79 to 0.84 last September and, if it posts another increase for the following month, the Swissy could have a chance to bounce back.

On Wednesday, the KOF economic barometer will be released at 10:30 am GMT. This could show that the reading dropped from 0.80 to 0.66 in November, reflecting a downbeat economic outlook for the next six months based on Switzerland's current economic data. A weaker than expected reading would hint at dim economic prospects, which could be bearish for the Swissy.

Then, on Thursday, Switzerland will release its SVME PMI. This could reveal that the manufacturing industry contracted yet again in November as the index is expected to dip from 46.9 to 46.7. Again, a weak figure could be negative for the Swiss franc, so make sure you keep an eye out for the release at 8:30 am GMT.

Last but not least, the retail sales report of Switzerland is set for release on Friday 8:15 am GMT. After dipping by 0.9% in September, annualized consumer spending is expected to rebound by 1.2% in October. Watch out for the actual release because a strong figure could give the Swissy a nice solid boost.

[PipDiddy]

Surprise, surprise! Despite the risk rally, the Swiss franc was able to chalk up some pretty decent gains against the dollar and the euro. It stole 45 pips from the dollar, pushing USD/CHF to .9231. Meanwhile, it took 79 pips away from the euro and dragged EUR/CHF to 1.2287.

It seems the Swiss National Bank's decision to peg the franc to the euro has started to affect how the markets perceive it, eh? Normally, you wouldn't expect to see the franc rally in times of risk-taking, considering the safe haven status that it has developed through the years. But that's exactly what it did yesterday!

Let's see if the franc will continue to climb today. We've got the UBS consumption indicator due at 7:00 am GMT, and the last time it came out, it printed a reading of 0.84. If October can surpass these results, it might give the franc an extra boost, so don't even think of missing this report!

[PipDiddy]

And that makes it two for two! Once again, the Swissy recorded gains against the dollar and the euro as USD/CHF trickled down 33 pips to close at .9198 and EUR/CHF fell 26 pips to 1.2261. Will it remain unbeaten for the week?

The UBS consumption indicator rose from 0.82 to 0.91 in October as a high number of new vehicle registrations helped it record its second monthly increase.

However, this doesn't mean that all is well in Switzerland. The Swissy's strength has been encouraging consumers to do their shopping abroad, which explains why the domestic retail scene has been deteriorating.

Those of you planning to trade the Swissy today should tune in at 10:30 am GMT, when the KOF economic barometer comes out. Look for the index to fall from 0.80 to 0.65, but expect to see a Swissy rally if the actual results exceed expectations.

[PipDiddy]

The Swissy may have posted its third win this week against the dollar, but yesterday's risk rally led it to break its winning streak against the euro. USD/CHF recorded its biggest drop so far this week, falling 62 pips to .9137. On the other hand, EUR/CHF managed to climb 15 pips to end at 1.2276.

Considering how badly the KOF economic barometer printed, I daresay that the Swissy was lucky to NOT lose ground! Not only was October's reading of 0.80 downgraded to 0.75, but the index slid even further down in November. The barometer fell to a new low of 0.35 last month, which is just about HALF the figure that most economists had predicted. Digging deeper into the report, you'll see that manufacturing, consumption, and exports to the EU, which are all very important contributors to GDP, displayed negative trends. Yikes!

From the look of it, our buddies up in Switzerland may have more bad news in store today. At 6:45 am GMT, the quarterly GDP report is due, and the outlook isn't good. Forecasts have growth tempering from 0.4% to 0.2% in Q3 2011. Yeah, 0.2% isn't really much, so if GDP fails to meet expectations, it could sap demand for the Swissy and put an end to its recent rally against the dollar.