Daily Economic Commentary: Switzerland

[PipDiddy]

The Swissy was one of the few currencies that was able to rally versus the safe haven Greenback. USD/CHF, which began the day at .9605, closed the U.S. trading session 51 pips lower at .9554.

The Swissy's strength came from some good news from the Swiss government. According to Swiss economic leaders, the growth forecast was revised up since domestic demand was was helping offset the damaging effects of the strong currency on the country’s export sector. The Swiss Producer Price Index didn't do so well though. The PPI showed that prices fell 0.2%, slightly worse than the 0.1% decline initially expected.

Today is a pretty big day for the for Switzerland as its central bank, the Swiss National Bank (SNB), will go on the wires to announce their decision on the Libor Rate. The market widely expects the central bank to keep rates below 0.25%, so attention will probably turn to the accompanying statement. Traders will be closely monitoring the changes to the SNB’s stance towards the EUR/CHF peg.

[PipDiddy]

The SNB sure was on a defensive mode yesterday! Like a momma bear defending her cubs, the SNB explicitly stated that it won’t tolerate any more franc strength. So why did the franc strengthen further? EUR/CHF barely reacted to the news, while USD/CHF fell by another 36 pips to .9518.

With the central bank upgrading its growth forecasts, can you really blame the franc bulls for attacking? Among other things, the SNB hiked its growth forecasts for 2012 from “close to 1% growth” to 1.5%. It also adjusted its inflation forecasts from -0.6% to -0.5%.

But that’s not all the SNB had to say! Aside from keeping its LIBOR unchanged at 0% to 0.25%, the central bank went all momma bear on the franc, saying that it absolutely won’t tolerate any more franc strength. It even went so far as to say that it’s willing to buy unlimited quantities of euros to defend the 1.2000 EUR/CHF floor!

Thing is, the SNB didn’t provide any more details on how it could keep on protecting the floor. And as far as investors are concerned, the reasons for buying the franc are no less valid yesterday then they were before the central bank made its announcement.

No economic report will be released from Switzerland today, so you might want to keep tabs on any reports that might affect demand for the euro and the other high-yielding currencies. You’ll never know when the markets decide to challenge the SNB’s promise to defend the EUR/CHF floor!

[PipDiddy]

Thanks to the overall dollar weakness due to QE3 speculations and disappointing data from the U.S., the franc was able to stage a stellar performance last Friday. USD/CHF, which began the day at .9519, ended the U.S. trading session at .9489.

No tier 1 data on the Swiss docket this week, but there are a couple of medium-tier reports that will come out.

On Wednesday, there’s the ZEW economic expectations survey (9:00 am GMT). Then on Thursday, the country’s trade balance (6:00 am GMT) and industrial production report (7:15 am GMT) will both be published. These reports do not normally have a strong impact on price action, but it’s still a good idea to keep an eye out on them… just in case!

[PipDiddy]

The franc was huddled to the losers’ camp yesterday as risk appetite cut back demand for the low-yielding currency. USD/CHF rocketed by 90 pips to .9549, while GBP/CHF also enjoyed a nice 99-pip rally. That means cheaper Swiss chocolates, yo!

No report was released from Switzerland yesterday, but traders dumped the low-yielding currencies in favor of higher-yielding ones after the Greek election results suggested that Greece would stay in the euro block for a while yet.

No economic data is scheduled again today, but you might want to keep an eye out for risk sentiment as it also affects the price action of the low-yielding franc. Who knows, maybe we’ll even hear from the SNB again if risk aversion comes back with a vengeance!

[PipDiddy]

Thanks to the debt problems in the euro zone and the prospect of QE3 from the Fed, the Swiss franc was able to pocket a ton of gains in yesterday's trading as USD/CHF ended nearly a hundred pips down from its .9549 open price. Can the Swissy extend its wins today?

Although Switzerland didn't release any economic data yesterday, the Swiss franc emerged as the safe-haven of choice as demand for the U.S. dollar weakened on QE3 speculations.

Switzerland is set to release its ZEW economic expectations report today and this could have a huge impact on USD/CHF's movement. Recall that the index slipped from 2.1 to -4.0 in April, indicating that an economic downturn could be in the cards. If the May reading manages to jump back into the positive territory and hint at a more upbeat economic outlook, we could see the Swissy go for more gains. Keep an eye out for that report due 9:00 am GMT.

Don't forget that the FOMC is set to make its rate statement today and that this event could trigger a lot of volatility for the dollar pairs. Stay on your toes!

[PipDiddy]

With only the ZEW report out from Switzerland, USD/CHF traded on dollar appetite for most of the day. The pair hit an intraday low at .9424 at the release of the FOMC minutes, but it soon capped the day near the .9450 handle.

Switzerland’s ZEW economic expectations report plunged to -43.4 in June after showing a -4.0 reading in May. Lucky for the franc bulls, all eyes were on the Greenback as they wait for the FOMC minutes. As I mentioned in my USD piece, the Fed’s decisions turned out bearish for the Greenback in the end.

Let’s see if Switzerland’s trade balance report at 6:00 am GMT and quarterly industrial production data at 7:15 am GMT will catch the investors’ attention. Both reports are expected to print weaker numbers from their previous releases, make sure you stay glued to the tube in case we see surprises.

Have fun trading today, kids!

[PipDiddy]

After struggling to stay below the .9500 handle, USD/CHF finally gave in to risk aversion and soared to a high of .9573 yesterday. Falling gold prices, as well as weak U.S. data, weighed heavily down heavily on the Swissy yesterday.

The lack of any economic reports from Switzerland left the Swissy vulnerable to shifts in risk sentiment. Risk aversion was the major market theme yesterday as the U.S. jobless claims, existing home sales, and Philly Fed manufacturing index all failed to matchup to market forecast. It also didn’t help that commodities got sold off.

Nothing left on Switzerland’s forex calendar for today, so look at European data, particularly the German IFO business climate survey, for the Swissy’s direction.

[PipDiddy]

The Swissy must've been gassed after its big drop on Thursday... because it hardly moved on Friday! USD/CHF ended just 13 pips below its daily opening price to enter the weekend at .9560.

It didn't help that Switzerland didn't post any significant reports last Friday. Unfortunately, it looks like we'll get more of the same this week as the economic calendar looks extremely light in the coming days! The only noteworthy report scheduled for the week is the KOC economic barometer (expected to improve from a reading of .81 to .88).

But until that report comes out, it looks like we'll have to trade the Swissy based on risk sentiment. If risk aversion dictates price action again, it could lead to gains for the dollar and more losses for the Swissy.

[PipDiddy]

USD/CHF crawled farther away from its weekend gap as it edged up the charts in yesterday's trading. The pair opened at .9573, reached a high of .9630, before it closed at .9604. Will the gap get filled today?

Switzerland didn't release any data yesterday but the franc got beaten up by risk aversion from downbeat news in the euro zone, namely Moody's downgrades and Spain's official request for a bailout. However, the franc was able to bounce back a bit during the U.S. session as stronger than expected U.S. new home sales sparked a mild safe-haven selloff.

Only the UBS consumption indicator is due from Switzerland today and this report isn't expected to have a huge impact on Swissy pairs. Still, it might be helpful to find out whether the index beats the previous reading of 1.41 and indicates an improvement in the Swiss economy for May. Otherwise, the Swiss franc might lose its appeal if the index shows a decline. Stay tuned for that at 6:00 am GMT!

[PipDiddy]

Not much action from the Swissy yesterday - USD/CHF only moved 9 pips up from its opening price of .9604! Will this snoozefest continue?

Yesterday's UBS consumption indicator did little to move the markets as the index dropped its reading from 1.37 to 1.05 in May. Apparently, though consumer sentiment turned down last month, it did nothing to change UBS's evaluation of the Swiss economy. No wonder the report was largely ignored on the charts!

Sadly, we won't be getting anymore reports from Switzerland until Friday, so for now, take a chill pill and keep a close eye on risk sentiment if you plan on trading USD/CHF!