CHF: Swiss Franc continues to move away from the highs

Swiss Franc rate continues to weaken at the Forex currency market on Friday, giving way to the USD.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF, however is continues to go down, indicating sale. Stochastic Oscillator, however, is giving a pair buy signal, being in the neutral zone and rushing to the overbought line.

Forex recommendations: taking into account current sentiment in the market we can expect that bullish sentiment for the pair will intensify and then buyers’ target today will become the levels of 0.9540 and 0.9630.

According to statistics released yesterday, levels of exports in the country increased by 10.9% y/y in December, the index rose mostly due to the demand for watches (export of watches in December: +25.5%, to 1.53 billion francs). At the same time trade surplus ( supported by the data mentioned above) rose to 1.3 billion francs in December and levels of import increased by 10.5% y/y (14.2 billion francs). 

Note that SECO, the Department of Economic Policy in Switzerland believes that this year GDP growth will drop to 1.5% while in 2010 it amounted to 2.7%. The department will release a new forecast on 17 March.

Meanwhile, situation in Swiss economy is far from being optimistic. Swiss data released earlier was negative: (Retail sales in December: -0.4% y/y against +1.8% for the previous period; PMI in the manufacturing sector in January: 60.5 against 61.2 for the previous period).

In addition, indicators of last week showed ongoing pressure on Swiss economy: leading indicator according to the Research Institute KOF fell to the level of 2.10 against the level of 2.11 in December, which became the fifth consecutive fact of reduction of the indicator. However, the data was still above than the forecast of economists (2.05)

Therefore, the pace of economic recovery in the country has obviously slowed down and the guilt for it is laid on Swiss Franc too.

We would remind that Swiss monetary authorities gave to understand earlier that expensive Franc bears danger. Thus, chief economist of the government Aimo Brunetti noted on Wednesday that ongoing growth of CHF will have a negative impact on Swiss economy, affecting adversely the growth of economic system. At the same time, according to him there is no actual evidence of slowdown in Swiss economy so far.

 

 

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