Daily Economic Commentary: Switzerland

The CHF just refused to let the USD retrace some of its losses in yesterday’s trading session. The USD/CHF attempted to rally above 1.0200 but sellers proved to be too strong as they brought the pair back down towards the 1.0150 price level before the US session ended.

In economic news, the ZEW economic expectations report improved to 65.0 from 58.0. This means that investors are getting more and more optimistic about the state of the economy. The “line in the sand” figure is zero, and a figure higher than that indicates optimism.

The report on retail sales could produce some fireworks in the USD/CHF pair later today. The estimate is that sales grew 1.1% in August. If forecast holds, it would be an improvement from the previous reporting period’s 1.0% increase. A higher than expected figure could lift the CHF against the USD again on account of risk appetite. The report is due at 9:00 am GMT.

The Swissy lost some ground against the USD, as it got caught up in a strong dollar move. The pair closed the week at 1.0187, after it had tested as low as 1.0120 within the week.

A report released on Friday showed that retail sales have fallen by 1.0% from a year ago. This was disappointing, as it was expected that retail sales would rise by 1.0% from last year’s levels.

Empty week for Swiss reports, as no high impact report are on deck for this week. CHF trading will most likely be driven by shifts in risk sentiment. Be on the lookout for strong moves, especially during the US trading sessions when key earnings reports are released.

Drawing strength from the surge in risk appetite, the Swissy overtook the greenback during Monday’s trading. Switzerland and the US did not release any economic reports yesterday but, with the DJIA reaching a fresh yearly high, the USDCHF fell to a low of 1.0103.

Switzerland’s economic schedule for today is report-free as usual but economic reports from the US could dictate where the USDCHF would go next. Data on building permits and housing starts are expected to be on the positive end, which might cause the greenback to rally based on fundamental strength. But if risk sentiment stays in the driver’s seat, then upbeat housing market reports should push the USDCHF lower.

Also, earnings reports from top companies such as Pfizer and Coca-cola are on today’s docket. If today’s earnings reports show weak figures, then risk appetite could retreat and allow the USDCHF to recover some of its losses.

Despite the overall strength of the USD in yesterday’s trading, the Swissy still managed to reach a new yearly high against the dollar. The USDCHF pair fell to fresh low of 1.0083 before closing at 1.0127. The 1.0100 support appears to be keeping the pair afloat at least for now. Though, the pair could fall down to the psychological 1.0000 mark if this level breaks.

No economic reports were due in Switzerland yesterday. Despite the absence of positive reports in Switzerland and the somewhat bearish sentiment on the markets, the CHF still advanced over the dollar, with the USDCHF pair marking a new low.

Switzerland will be idle today as well in terms of economic updates. The Swissy would probably just look for leads from the other currencies regarding its short term direction.

The CHF joined in on the EUR’s success as it, too, made significant headway against the USD. The USD/CHF pair made another yearly low, hitting the 1.0050 for the first time since July 2008.

No economic data is expected out of Switzerland today so expect the CHF to take queues from the EUR/USD pair regarding its price action. The USD/CHF and the EUR/USD pairs tend to have a tight inverse correlation. This means that whenever the EUR/USD starts climbing, the USD/CHF does the opposite and heads lower.

The CHF seems poised to reach parity with the dollar, as it finished higher against the USD once again. The pair closed at 1.0041 - could today be the day it reaches 1.000?

A report showed that the Swiss trade surplus widened to 1.92 billion CHF during the month of September. This was slightly better than expected, as the surplus was expected to be at 1.59 billion CHF.

No data on deck today, so watch out for data coming out from other countries. Also, watch out for the EUR/USD pair, which is now trading above 1.5000. Lastly, also be aware of potential profit taking since it is a Friday.

The USDCHF has been inching closer and closer to the 1.0000 mark, reviving concerns about the possibility of currency intervention by the SNB. Increased risk tolerance last week drove the USD lower against the CHF… Would USD weakness carry on for another week and bring the USDCHF to parity?

The main events on Switzerland’s economic schedule for the week are the release of the UBS consumption indicator and the KOF economic barometer. The UBS consumption indicator, which is due Tuesday 7:00 am GMT, could chalk up another month in declines. The indicator stood at 0.96 in June but tumbled down to 0.66 in August. No forecast has been given but if we see this indicator break free from the downtrend, then the USDCHF could edge even closer to 1.0000.

The KOF economic barometer is due on Friday 10:30 am GMT. The indicator is expected to rise from 0.85 to 1.16 in October. If the actual figure fails to meet expectations, then the USDCHF could climb back up.

Earnings reports from several US companies are due this week with the US advanced GDP report also on tap. Watch out for sudden shifts in risk sentiment!

The Swissy was not able to save itself from the yesterday’s dollar rally. Just last Friday, the USDCHF marked a new yearly low at 1.0034. Yesterday, the pair sprung back to a high of 1.0203 before closing at 1.0181.

Switzerland was report-free yesterday. As mentioned, the Swissy weakened against the greenback due to the emergence of risk aversion in the US equities markets. Fears regarding the economy surfaced once again as market participants worry about the expiration of the government’s tax credit for homebuyers. Such could have a negative impact on home sales. Moreover, the Bank of America is said to sell new shares to pay back the government’s bailout money. Doing so would effectively dilute its shares.

Today’s calendar will be relatively light with only the release of the UBS consumption indicator for September due at 7:00 am GMT. The index posted a score of 0.658 last August. It’s probable that the account could register a dismal number given the unexpected 1.0% y/y drop in retail sales for the same period. This could further weigh down on the CHF.

The Swiss franc started the day on a strong note yesterday but eventually fell when risk aversion caused by poor CB consumer confidence figures came out. The USD/CHF pair, which opened the Asian trading session at 1.0181, closed the US session at 1.0218.

Improvement in the UBS consumption indicator for September failed to provide support for the franc. The report, which is a combined reading of economic indicators related to consumer spending, printed 0.63, slightly higher than last reporting period’s revised down figure of 0.62.

No economic data due today so the franc’s price action would primarily be dictated by data coming out of euro zone and risk sentiment.

The USD cut up the CHF like Swiss cheese, and the pair shot up in yesterdays trading session. The pair closed the day at 1.0271.

With not much data coming out recently, the USDCHF has been relying on degrees of risk sentiment. As a result, the pair has been rising as of late, as traders and investors have been avoiding risk this week. So once again, be aware of data that is coming out from other countries. For today, watch out for the US Advanced GDP report that is coming out at 12:30 pm GMT.

Tomorrow will be a little more interesting, as the KOF economic barometer index is due at 10:30 am GMT. The index - which tries to measure the direction of the economy - is expected to rise to 1.16, after posting a reading of 0.85 in September.

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.

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.

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.

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.

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?

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.

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.

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!

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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!