CHF: Swiss Franc does not go out of the range

At the Forex currency market Swiss Franc rate goes down slightly on Monday amid general correction and investors’ negative sentiment; however it still remains within the range of 0.9604-0.0.9785.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and is going up, confirming a pair buy signal. Stochastic Oscillator remains in the oversold zone today and is not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9670 the pair will go to 0.9710 and 0.9750. If the level of 0.9600 is exceeded, traders’ target will be the levels of 0.9560 and 0.9500.

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.

In addition, the government announced that the SNB should influence on the rate of the Franc, working with it directly. It increases the possibility of the regulator’ intervention in the market unilaterally.

Note, that Franc has a real detrimental effect on Swiss economy, exerting pressure on the process of its recovery.
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.

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.

[More]