[B]GBP/CHF - The Pair to Short-Term Range Trade
Event Risk UK and Switzerland
Trading Tip - Though GBPCHF has been engaged in a number of very dramatic trends in the past few months, recent price action suggests that the pair is falling back on the range conditions that have been more prevalent in the past. Nonetheless, the range is still young and this pair is quite volatile, so the set up and risk management are essential. Suggested entries are set close to range and technical limits to ensure strong risk/reward. At the same time, any threat of high volatility could also work in favor of the range trade since profit targets can be reached rather quickly. Though long positions are rather straight-forward and backed well by support, shorts are a little more questionable; and if the level is reached with a steep rally that doesnt show signs of slowing, the short side should be removed.
UK - Now that first quarter GDP is out of the way, the UK indicators on tap over the course of the next week may not spark much volatility, leaving the currency primed for range trade. While there is no official announcement date as of yet, HBOS house prices will likely rise in line with the Nationwide release, as growth in the housing sector goes unscathed. GfK consumer confidence may not be as resilient, however, as prospects of higher rates could cause concern amongst households. The following Tuesday, PMI manufacturing could ease back as a stronger British pound may have weakened demand for exports. The next day, M4 money supply could easily slide under the radar should the figure go unrevised. However, a surprise jump could ignite additional fears that rampant expansion of money supply is helping to fuel broader price pressures. Finally, PMI Services may show mild softness in the sector, but with expectations set for a reading of 57.5 versus 57.6 during the month prior, the impact will likely be insignificant in Sterling trade.
Switzerland - Economic indicators over the course of the next week could be crucial to Swiss franc trade. First, the KOF Leading Indicator is anticipated to hit a six-month high of 2.00, as the sturdy Swiss economy wears on with the help of robust domestic demand and strong export growth. Given the resilience of the Swiss economy, one of the healthiest and most stable in the developed world, traders may start to price in the potential of continuous quarterly rate hikes throughout the rest of the year. A solid SVME PMI result the following Thursday and a rebound in inflation results would reinforce this sentiment. In fact, CPI is estimated to surge 0.8 percent during the month of April, underpinning a substantial amount of event risk at the end of the week.
Data for April 27 - May 4
Data for April 27 - May 4
UK Economic Data
Swiss Economic Data
GfK Consumer Confidence (APR)
Apr 27 KOF Swiss Leading Indicator (APR) May 1-4 HBOS House Prices (APR) May 2 SVME PMI (APR) May 1 PMI Manufacturing (APR) May 3 CPI (APR) May 2 M4 Money Supply (MAR F) May 3 PMI Services (APR)