CHF: Swiss Franc determines movement direction on Thursday

At the Forex currency market Swiss Franc rate almost makes no movement on Thursday; while investors assess external background and technical signals.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF however it has been moving along the signal line for the second day and is not giving a clear signal. Stochastic Oscillator remains in the oversold zone today and has not forms a signal either.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9600 the pair will go to0.9650 and 0.9700. If the level of 0.9520 is exceeded, traders’ targets will be the levels of 0.9460 and 0.9380.

Thus, Franc managed to attract attention of Swiss authorities and regulator as well, at the briefing yesterday, representatives of the Swiss National Bank raised the issue of CHF. Finance Minister of the country stated that there are no signs of speculation in the market which can shift the Franc; while economy in the country grows and there are no signs of crisis.

It was also stressed that an issue of expensive Franc will become a subject of discussion in the next couple of weeks.
In this context it can assumed that the rate of the pair USD/CHF can remain in the narrow range or take aim at the rise under the pressure of such verbal intervention.

 We would remind that a week earlier Swiss government announced that the SNB should influence on the rate of the Franc, working with it directly. This increases the possibility of the regulator’s unilateral intervention in the market. Note that Franc has a real detrimental effect on Swiss economy, exerting pressure on the process of its recovery. This has been confirmed by Swiss authorities who reminded that strong Franc complicates correction of the national economy.

However, recent actions of regulator indicate that 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.

         

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