Daily Economic Commentary: Switzerland

[ForexGump]

The USDCHF pair made an almost vertical dive as risk appetite surged on news that the US economy made it out of the recession. After hovering above the 1.0250 mark, the USDCHF dropped to a low of 1.0168.

Since no reports were released from Switzerland yesterday, risk sentiment was the main factor driving the USDCHF price movement. When the US printed 3.5% in GDP growth, traders took this as a sign to buy up higher-yielding currencies in exchange for the USD.

Switzerland's economic calendar has the KOF economic barometer due 10:30 am GMT today. The indicator is expected to climb from 0.89 to 1.19, implying that economic conditions in Switzerland are slowly improving. Later on, economic reports from the US could continue to fuel the run of risk appetite from yesterday. Chicago PMI, University of Michigan consumer sentiment index, and data on personal spending and income are due from the US today.

[ForexGump]

The USDCHF pair closed higher at 1.0264 from an opening price of 1.0190 last Friday due mainly to the broad-based weakness in the US capitals markets. Sentiment has been for the USD for the most part of last week. The pair could break loose from its downtrend (1-hour) if such remains.

The KOF economic barometer was the lone report in Switzerland last Friday. The account surpassed expectations as it rose to 1.45 (vs. 1.19) from 0.77, indicating that the economy is gradually improving. The report, however, did not have much impact on the Swissy’s valuation.

What swayed the Swissy to the downside was the general weakness in the US capitals markets. The broad markets fell sharply following the 0.5% drop in consumer spending which was further aggravated by the bankruptcy announcement of CIT Group Inc. which is a 101-year-old commercial lender in the US.

Several mid-tier accounts are scheduled for release this week in Swtzerland. Today, the SVME PMI is projected to come in at 55.1 from 54.3. On November 5, the SECO consumer climate and the country’s CPI will be due. CPI is seen to climb by 0.6% after staying flat in the month prior. The SECO account, on the other hand, is also anticipated to improve slightly to -37 from -42.

Despite these reports, much weight will still be given to the ones coming out of the US. The Fed will decide on its interest rate on November 4. While they are widely anticipated to leave the rates unchanged at 0.25%, they could already discuss the central bank’s exit strategies given the 3.5% growth of the US during the third quarter. It will be bearish for the Swissy if they do. Meanwhile, the much awaited NFP report is scheduled on November 6. The account is estimated to print -173,000 in October on top of the previous score of -263,000. Worse-than-projected results could also be bad for the CHF.

[PipDiddy]

The USD/CHF edged lower to 1.0200 yesterday when risk appetite gained some support from better-than-expected results from economic reports that came out of the US.

The SVME PMI which was released yesterday told a mixed story. It came out with a reading of 54.0 for October, much lower than the 55.1 initially expected. Last reporting period’s figure stood at 54.3. Despite the dip, the results of the survey still shows that the manufacturing industry is expanding.

No economic report due today so expect the CHF’s price action to be largely dependent on risk sentiment and data coming out the US and euro zone.

[PipDiddy]

The USDCHF attempted to break for new highs as the dollar benefitted from a run of risk aversion in intraday trading. The USDCHF rose to as high as 1.0339, before giving up much of its gains during the US session and ultimately closed at 1.0269.

Once again, no data will be coming out from Switzerland today, so be on the lookout from data being released elsewhere. More specifically, watch out for the FOMC statement due at 7:15 pm GMT. Traders will be following this report, so keep your head up and be aware when trading.

Tomorrow, the SECO consumer confidence and CPI m/m reports will be on deck. The confidence index is expected to have a reading of -37, an improvement over last quarter’s score of -42, while consumer prices are expected to have increased by 0.6% in October.

[PipDiddy]

The USDCHF's tumble seemed unstoppable yesterday as weak US fundamentals and the FOMC statement failed to provide support for the greenback. The pair dropped from an intraday high of 1.0326 all the way down to a low of 1.0174.

For today, the Swissy could continue its rally as Switzerland releases a couple of economic reports. SECO consumer climate, which is due 6:45 am GMT, is expected to climb from -42 to -37 for the past three-month period. Later on, Switzerland's CPI will be released 8:15 am GMT. Price levels are expected to rise by 0.6% in October after holding steady in September. If the actual figures meet or beat the consensus, then the USDCHF could edge even lower.

Economic reports from the US, namely the weekly unemployment claims and the non-farm productivity report, could also have a major impact on the USDCHF's price action today. With these reports expected to reflect mild improvements in the US labor market, might we see continued USD selling based on increased risk appetite?

[PipDiddy]

The dollar finished slightly higher against the Swissy despite the optimism exhibited in the US equities markets yesterday. The USDCHF just traded between 1.0132 and 1.0194 before closing at 1.0162.

Switzerland’s SECO consumer climate improved to -30 in October from -42. The account was only projected to come in at -37. The index is composed of about 1,100 household surveys regarding the relative level of past and future economic conditions. While a score below 0.0 still indicates pessimism, the better-than-expected mark was enough to give the Swissy some short term support.

Meanwhile, inflation in Switzerland, as measured in the CPI came in line with the 0.6% forecast for the month of October.

Today, Switzerland’s unemployment rate will be issued at 6:45 am GMT. Unemployment for the month of October is seen to rise to 4.0% from 3.9%. While an increase in unemployment could send a negative signal on the economy, it is less likely that this will have much impact on the short term valuation of the CHF. This is so because focus will be largely placed on the issuance of the NFP report in the US later at 1:30 pm GMT. A slowing unemployment change could lift the markets together with the other “anti-dollars” like the Swissy. Though, volatility is usually very high right when the report is released.

[PipDiddy]

Despite the crazy price swings when the NFP report came out, the USD/CHF ended the Friday somewhat flat as it ended the US session at 1.0175, just 13 pips from its Asian open price.

The unemployment report release last Friday to garner any serious attention from currency traders but it showed that joblessness in the country edged up to 4.0% in October, just as expected, up from 3.9% in September.

No major economic reports due from Switzerland this week but do watch out for this month’s ZEW Economic Expectations survey on Wednesday, at 10:00 am GMT and October’s Producer Price Index on Friday, at 10:15 am GMT.

[PipDiddy]

The USDCHF plunged lower yesterday, as dollar selling took off throughout the day. The USDCHF pair closed the day at 1.0086, a two week low.

Nothing coming up over the next two days, but let me warn you about a couple of things you keep in mind while trading . First, as I always say, look out for any shifts in risk sentiment. It seems that dollar weakness is dominating the market right now, but with all the FOMC members talking today, you never know what will be said that could cause a run back to risk aversion. Secondly, with it being a US holiday tomorrow, we could see less liquidity in the markets, so be careful trading – you don’t wanna get caught up in any strong one directional moves!

[boom1]

what is forex can u tel me

[PipDiddy]

The USDCHF was stuck in a 50-pip range as it bounced up and down from support at 1.0060 and resistance at 1.0110. The US economic schedule was relatively light yesterday while Switzerland's was free from any reports.

Range-bound price action could carry on for today's trading sessions as US traders are off on a Veterans Day holiday. No economic reports are due from both Switzerland and the US. Although low volatility is expected, it wouldn't hurt to stay careful out there!