CHF: Swiss Franc came out of the range and is growing

At the Forex currency market Swiss Franc rate finally has come out of the previous range and demonstrates consolidation despite frequent talk about possible steps of Swiss national Bank and prospects of intervention.

Forex recommendations: if bearish sentiment for the pair intensifies and in case of breakdown at the level of 0.9600 traders’ targets will be the levels of 0.9550 and 0.9510.

Apparently, Swiss authorities are not ready for the currency intervention, although the market expects unilateral intervention by Swiss National bank. Despite concerns about the rise of CHF and CNB losses (in 2010 the regulator lost 21 billion francs or 4% of GDP due to the currency rise), the probability of intervention is estimated as low so far.

We would remind that last week the government of Switzerland clarified its position in regards to the growth of Swiss Franc for the first time in a long time. In particular, the authorities said that consolidation of CHF is a threat to the recovery of the national economy. The officials see the main catalyst of the CHF strengthening in the debt crisis in Eurozone. Note, that Franc has a real detrimental effect on Swiss economy, exerting pressure on the process of its recovery.

It became known earlier that consumer price index in Switzerland remained unchanged on monthly basis in December, demonstrating the rise by 0.5% on annual basis; while analytics had expected the growth by 0.2% m/m and +0.3% y/y.  It became known on Friday that Swiss national Bank refused to accept Portuguese state  bonds as collateral for the repo transactions –earlier the same action has been taken for Irish securities. Thus, SNB abandoned unnecessary risks, becoming the first regulator who acknowledged big problems of sovereign debts in the peripheral countries of Eurozone.

A report of Credit Suisse AG and Osec which was made public this week showed that sentiment of Swiss exporters is improving despite the recent highs of the Franc. Companies are confident that demand for the goods of Swiss production will remain high over the next few months, although the threats posed by the expensive CHF are still present. According to the research, export barometer in QI of this year will amount to 0.6 which is higher than the levels of Q VI 2010. In general the results of the QI of this year are expected to be favourable in the export sector. Companies are taking into account that after the rise of the Franc by 16% last year the demand from the Eurozone will be lower but not critical.

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