Daily Economic Commentary: Switzerland

[PipDiddy]

The franc is on fire baby! For the second day in a row, the franc destroyed the dollar, as USD/CHF fell another 44 pips to close at .9592. Will the franc bulls go for three in a row?

The only data on tap for today is trade balance figures at 6:00 am GMT. Expectations are that a surplus of 2.10 billion CHF was posted for the month of July.

Still, I don’t expect this report to have too much bearing on Swissy trading. Make sure you check out our forex calendar for other data scheduled for release during the New York session, as these could prove to be the main drivers of risk sentiment today.

[PipDiddy]

Make that 4 days in a row! The Swiss franc extended its gains against the dollar in yesterday's trading. USD/CHF dropped from its opening price of .9592 and traded all the way down to .9539 where it bottomed. At the end of the day, the franc was able to score a 31-pip gain as the pair closed at .9561.

There wasn't any economic data from Switzerland. However, it looks like the mixed roster of reports from the U.S. gave traders enough reason to buy the franc at the dollar's expense. Of course, it also helped that markets are optimistic about the upcoming meeting of Greek Prime Minister Antonis Samaras with German Chancelor Angela Merkel, French President Francoise Hollande, and the EU.

Our forex calendar for today is once again blank for reports for the Swiss franc. With that said, make sure you keep tabs on updates regarding the much-anticipated meeting. I have a feeling that it would continue to have an impact in the currency markets in today's trading. Good luck!

[PipDiddy]

On Friday, the Swiss franc lost all of the pips it gained on Thursday faster than an avalanche in the Swiss alps. USD/CHF traded higher immediately after opening at .9561. By the New York session close, the pair was up 36 pips above its starting price.

But fret not! Some market gurus say that the Swiss franc probably just took a break after a few consecutive days of rallying against the dollar.

That doesn't mean you should go back to shorting USD/CHF blindly though! Be on your toes for events that could shift market sentiment. Should risk aversion kick in, we may just see the Swiss franc score another loss in today's trading.

[PipDiddy]

The franc joined its European counterparts in the losers' bench yesterday. USD/CHF traded higher, after opening at .9599. By the end of the New York session, the franc had incurred an 11-pip loss at .9610.

It would seem that investors were still jittery in yesterday's trading. Consequently, the dollar and the yen saw bigger demand as traders sought their safe haven appeals.

With that said and given that our forex calendar is still blank for reports from Switzerland, make sure you're on your toes for any shift in market sentiment. Should risk appetite pick up in today's trading, we may just see USD/CHF trade lower.

[PipDiddy]

The Swiss franc was able to stage a nice 46-pip run versus the dollar yesterday, thanks to a highly successful Spanish bond auction. Additionally, the Swiss National Bank (SNB) is believed to have accumulated all the euros that it intends to, and will now ease on defending the EUR/CHF peg.

Internal data was also positive. The employment level report showed that the number of people employed for the second quarter was at 4.07 million, notably higher from the 4.04 million forecast. It was also an improvement from the first quarter’s 4.05 million figure.

Today, the KOF economic barometer will be released. It will come out at 7:00 am GMT and is expected to print a 1.51 reading. If it comes out higher than forecast, we could see the franc exhibit another strong performance.

[PipDiddy]

With the KOF economic barometer printing stronger-than-expected, analysts believe that the SNB’s EUR/CHF peg is working. So why did the franc fall against its counterparts?

USD/CHF capped the day 29 pips higher at .9585, while GBP/CHF also rose by 53 pips to 1.5174. Whatever caused the franc’s weakness, it can’t be from the KOF economic barometer, which was the only report released from the Land of the Swiss Alps yesterday.

The data came in at a 1.57 reading in August, which is not only stronger than July’s 1.41 figure but is also higher than the 1.51 number that analysts were expecting. The report sent a cloud of good vibes among the investors as it hinted that the SNB’s EUR/CHF peg at 1.2000 is doing its magic at supporting economic activity.

No other news report is expected to come in from Switzerland today, so keep an eye out for market-moving reports from the euro zone and the U.S.!

[PipDiddy]

Due to the lack of market-moving data from Switzerland, USD/CHF exhibited little movement yesterday. Save for unexpected 50-pip risk aversion spike up during the morning U.S. trading session, the pair generally consolidated the entire day.

The short bout of risk aversion was caused by weaker-than-expected data from the U.S. The unemployment claims came in at 374,000, slightly higher than forecast. Meanwhile, the Core PCE Price Index showed a flat reading versus the 0.1% increase initially expected.

No data scheduled to be released from Switzerland again so the Swissy’s direction will most likely be determined by U.S. data again. Be careful of profit-taking action from big banks too. After all, it is both a Friday and the end of the month!

[PipDiddy]

With no data out from Switzerland, the franc joined the anti-dollar rally last Friday. USD/CHF fell to an intraday low of .9502 before it closed just below its intraweek support at the .9550 area.

Thanks to Ben Bernanke hinting of a QE3 in the near future, the Greenback weakened against its counterparts including the franc.

Will the franc perform as well as last Friday when Switzerland releases its tier one data? Aside from SNB Chairman Jordan’s speech at 7:00 am GMT, Switzerland will also release its retail sales and SVME PMI numbers at 7:15 am and 7:30 am GMT respectively.

The Swiss Alps country will also print its GDP report tomorrow at 5:45 am GMT, which will be followed up by the CPI numbers on Wednesday at 7:15 am GMT. Then, just before Uncle Sam prints its NFP report on Friday, Switzerland will release its employment numbers at 5:45 am GMT and foreign currency reserves report at 7:00 am GMT. Talk about a jam-packed week!

[PipDiddy]

Despite weaker than expected data from Switzerland, the Swiss franc was able to keep its head up during the London session and even end the US session with a tiny gain against the Greenback. USD/CHF closed at .9536, 22 pips down from its .9558 open price.

Switzerland's annualized retail sales figure missed expectations of a 3.5% increase for July and posted a mere 3.2% rise. Even worse, the June figure was revised down from the initial 3.7% estimate to show a 3.3% year-over-year uptick for the month.

Meanwhile, the SVME PMI revealed that the Swiss manufacturing industry contracted yet again as it showed a 46.7 reading for August. This came as a surprise since analysts were expecting the PMI to climb from 48.6 to 49.2 during the month.

Today, Switzerland is set to release its GDP figure for Q2 2012 and possibly show that their economy grew by 0.2%. This would be much weaker than the previous quarter's 0.7% growth and Q2 2011's 0.4% economic expansion. Make sure you stay tuned for the actual release at 5:45 am GMT because a weaker than expected reading could result in a Swissy selloff!

[PipDiddy]

Thanks to a weaker-than-expected Swiss GDP reading, the franc gave up its gains against its counterparts. For example, USD/CHF jumped by 25 pips and capped the day at .9561 after hitting an intraday low at .9509.

It wasn’t all about the franc though. Risk aversion in markets also boosted the Greenback higher, which explains why the franc didn’t lose as much against its other counterparts.

Today Switzerland is set to release its CPI data at 7:15 am GMT. If the data prints way hotter than the expected 0.1% growth, then it could remind investors that SNB’s Thomas Jordan is becoming concerned with rising prices in the real estate sector. Will it cause speculation of more SNB action?