CHF: Swiss Franc continues to retreat

At the Forex currency market Swiss Franc rate is traded downward on Monday: Franc is of no interest as a protective currency to investors. However, there is a chance that due to the increasing negative factors of the external background Swiss currency will be able to strengthen slightly; although this trend is unlikely to be strong.

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF and maintains buy signal. Stochastic Oscillator is in the overbought zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8890, the pair USD/CHF will go to 0.8900 and 0.8920. If upward breakdown does not take place, the pair will consolidate at the current levels.

A meeting of Swiss National Bank will be held this week; decision on the three-month Libor rate will be made there, and also comments will be given on the current economic situation.

By Monday morning economic situation in Switzerland has not changed significantly.

Last week was extremely stressful for Franc and deprived traders of “safe harbor”. We would remind that Swiss National Bank fixed exchange rate of the Euro in pairing with Franc at the minimum permissible level of 1.20, causing a rally in the market. SNB noted in the comments that it is going to buy foreign currency in unlimited quantities to prevent growth of the Franc, as the CHF adversely affects economy of Switzerland. Therefore, now the SNB will carefully monitor the situation at the currency market and carry out interventions without warning.

According to the data released earlier, unemployment rate in Switzerland remained at the level of 3.0% in July. Statistics released earlier showed that the level of retail sales in Switzerland increased by 7.4% in June against the revised level of -3.9% in May. In addition, index of PMI SVME rose to 53.5 points in July against the forecast of 52.5 points. The data released yesterday showed that unemployment rate in Switzerland remained at the level of 2.8% in August, the same as in July.  It is good that “long arms” of the Franc has not reached this important sector. Statistics which was made public before this decision showed that Switzerland slides down to deflation: CPI in August fell by 0.3% m/m against the forecast of decline by 0.2% m/m.

It became known earlier that producer prices and imports prices in Switzerland declined by 0.7% m/m (-0.5% y/y) in July against the fall of 0.6% m/m in June. In addition, consumer confidence index in Switzerland fell to -17 points in Q3 against the forecast of -5 points. Statistics released earlier showed that indicator of consumption UBS fell to 1.29 points in July against the level of 1.52 points in June. The indicator has been sliding down not for the first month, showing negative tendencies in the economy; therefore, tough position of the SNB will be most welcome.

The Franc has no ground to grow at the moment.