Daily Economic Commentary: Switzerland

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.

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!

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!

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!

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.

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.

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!

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.

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.

The Swissy bounced off its recent lows, as the franc took a hit thanks to poor economic data. After testing lows around .9070, USD/CHF bounced up to as high as .9192, before settling at .9160, marking a 23-pip gain on the day.

The Swiss franc may have taken a hit due to slightly disappointing economic data that was released yesterday.

First, the Swiss economy grew by just 0.2% last quarter, down from the 0.5% we saw during the 2[SUP]nd[/SUP] quarter. This also marked the slowest pace of growth since the end of 2009.

Then later on, the SVME PMI printed worse-than-expected at 44.8. This marked the 4[SUP]th[/SUP] consecutive monthly decline and was its lowest reading in over two years. This means that managers expect manufacturing activity to dip in the coming months, which obviously wouldn’t bode well for the economy.

Later today, Swiss retail sales will be released at 8:15 am GMT. Word is that sales grew by 1.2% last October, which would be a nice improvement from the 0.9% decline we saw the month before. Perhaps this will give the franc the boost it needs to recuperate some of its recent losses.

After last week’s jam-packed action, trading on the Swissy was a lot more subdued to start this week. USD/CHF didn’t set off to make a new high or low and traded within a 70 pip range. By the end of the day, USD/CHF had closed at .9207, just 3 pips above its opening price.

Later today at 8:00 am GMT, data regarding the Swiss government’s foreign currency reserves will be released. This could give us insight as to how much money the SNB has in case it wants to intervene in the markets once again.

Also, don’t forget that inflation data will be released in the form of the CPI report at 8:15 am GMT. Word on the street is that consumer prices rose by just 0.1% last month. Chances are that we won’t see any wild moves following the release, but you never know what might happen!

Boy did the Swiss franc have a tough Tuesday! Against the dollar, it lost 58 pips as USD/CHF closed at .9265. Meanwhile, EUR/CHF ended the day 82 pips higher at 1.2415. And you know what, some investors are saying that the SNB might have had a hand in the franc’s losses yesterday. Uh-oh.

The rumors started going around after we saw the CPI report for November print a 0.2% decline and disappointed expectations which was for a 0.1% uptick. Some market junkies said that the negative figure may just be enough reason for the central bank to lower the ceiling on the currency’s exchange rate to the euro which currently stands at 1.2000.

Speculations then continued to heighten when the foreign currency reserves report indicated that the SNB could be more confident and aggressive in taming the franc’s strength. Data on currency reserves showed that despite repeated intervention by the SNB to buy euros, the central bank’s reserves didn’t increase from 245.0 billion CHF in September. In fact, October’s reading was only at 229.3 billion CHF.

For today we only have the unemployment rate for November on tap at 6:45 am GMT. With talks of an impending recession in Switzerland happening in 2012 already gaining steam, a figure worse than the expected 3.1% reading would probably be bearish for the franc as it would only confirm investors’ fears. So watch out!

Whoa, what a wild ride! The Swissy’s price action yesterday turned out to be a very crazy one as it fell sharply during the European session but quickly recovered during the U.S. session. At the end of the day, the Swissy was actually able to post a 24-pip gain over the Greenback.

The labor report from Switzerland yesterday shared some good news. It showed that jobless in the country has fallen to 3.0% from 3.3%.

No major news release from Switzerland today so the Swissy’s price action will probably be driven by events from other major economies like the U.S. and the euro zone.

What a wild and wacky day for the Swissy! After spiking to as low as .9177, USD/CHF soon recovered and managed to close at .9263, marking a 22-pip gain on the day.

No data on tap coming out from Switzerland today, so chances are that we could see consolidation to end the week. Watch out for any rumors coming out of the EU summit. If we hear more that progress is being made towards more fiscal unity, it would be a game changer in the markets and we could see risk appetite take over.

Despite the European Summit, the Swissy found itself barely changed versus both the euro and the dollar last Friday. EUR/CHF ended the day with just a 9-pip gain while USD/CHF closed 14 pips lower.

The big event for Switzerland this week is the Swiss National Bank (SNB)'s interest rate decision. The market widely expects the SNB to keep rates unchanged below 0.25%, so focus will probably turn to the accompanying statement.

Currency intervention talks have abated as of late, but that doesn’t mean that it won’t be talked about. If the bank starts jawboning again, then we could see the Swissy find some sellers!

When risk sentiment is in play, you know you can count on the franc to show some interesting price action! Concerns on the euro zone debt crisis took its toll on EUR/CHF as it dropped by 26 pips to 1.2359, but demand for the low-yielding dollar also boosted USD/CHF to .9371, a high not seen since March this year.

Of course, it might have helped the franc that Switzerland’s quarterly employment figures showed a solid growth of 4.05 million in the third quarter, a bit higher than the second quarter’s 4.02 million figure. And to think that expectations were only at 2.79 million new workers!

At 6:45 am GMT today the SECO economic forecasts are scheduled for release, but that doesn’t mean that you shouldn’t pay attention to risk sentiment! Remember that many investors still see the franc as a “safe haven” despite the SNB’s floor target on EUR/CHF, so a dramatic increase in risk aversion could still boost the franc against its other counterparts.

The Swissy found itself trading in a mixed fashion versus other major currencies yesterday. While it gave up a lot of ground versus the strengthening Greenback, it was able to post gains over the euro. USD/CHF ended the day 87 pips higher while EUR/CHF fell 28 pips. It appears that even though traders prefer the Swissy to the euro, the dollar remains their primary choice.

A bit of economic good news was published yesterday. Switzerland’s employment level report showed that the number of people employed during the third quarter was at 4.05 million, significantly higher than the 2.79 million figure initially expected. It was also a slight improvement from the previous quarter’s 4.02 million.

No data coming out of Switzerland today. Pay attention instead to the developments in the euro zone to determine the Swissy’s direction for today.

Who’s one of the biggest losers yesterday? I’ll give you a clue. It starts with F and ends with –ranc! That’s right, it’s the franc! Poor economic data from Switzerland weakened the low-yielding franc despite the risk aversion in the markets, and sent USD/CHF 66 pips above its open price.

With the disappointing economic data that was released yesterday, who could blame the franc bears from attacking? Switzerland’s producer price index dropped by another 0.8% in November after already slipping by 0.2% in October, while the ZEW economic expectations clocked in at a -72.0 reading in December. Remember, only a reading above 0.0 is considered as economic optimism.

Will the franc trade on economic data again today, or will its safe haven status provide some relief for the currency?

At 8:15 am GMT Switzerland will release its quarterly industrial production figures, with the data expected to show a 0.7% decline for the third quarter against the second quarter’s 0.6% growth.

Of course, the bigger report to watch out for is the SNB’s interest rate decision and press conference coming out at 8:30 am GMT. Word on the street is that the SNB could raise its floor on EUR/CHF to as high as 1.3000, but others believe that the central bank could only open its gates for the move this month instead of actually implementing it. What do you think?

Stay at the edge of your seats for this potential market-moving reports!

Let’s go, Swissy, let’s go! The Swiss franc was able to end the day higher than the euro and U.S. dollar as the SNB refrained from intervening in the currency market. USD/CHF opened at .9531 then closed at .9404 while EUR/CHF ended 136 pips down from its 1.2374 open price.

The Swiss franc was relieved that the SNB didn’t make any intervention moves during their monetary policy statement yesterday. Many were expecting the central bank to raise their EUR/CHF peg to 1.2500 or even 1.3000 but the SNB didn’t make any new efforts to weaken their currency. They simply reiterated their pledge to defend the EUR/CHF 1.2000 peg with “utmost determination” and left their Libor rate unchanged at 0.25%.

Switzerland won’t be releasing any economic data today so make sure you keep close tabs on market sentiment to find out where the Swissy could be headed. Stay on your toes!

Day two of the bulls and bears battle belonged to the franc bulls last Friday as Switzerland’s economic reports and the SNB’s lack of action on the franc strength kept the demand for the low-yielding franc steady. USD/CHF fell by another 40 pips to .9364, while EUR/CHF also dropped by 30 pips to 1.2208.

Though the economic boards were empty in Switzerland last Friday, the franc bulls kept the party alive with the thought that the SNB won’t be actively weakening the franc against its counterparts, at least until the end of the year.

Still, it doesn’t mean that the central bank isn’t watching the price action closely! Though no reports are scheduled from Switzerland again today, reports from the U.S., euro region, and the other major economies might influence the franc’s price action so make sure you stay glued to the tube, aight?