CHF: Swiss Franc falls back after yesterday’s growth

At the Forex currency marketSwiss Franc rate goes down on Thursday after the growth yesterday when thecurrency came close to the previous historic highs.

Forex forecast: MACD indicatoris in the negative area for the pair USD/CHF, however continues to go upward,giving a pair buy signal. Volumes remain average. Stochastic Oscillator isstill in the neutral zone, and goes down, giving a sell signal.

Forex recommendations: off themarket.

Feasible event scenario atForex: in case of breakdown at the level of 0.8430, the pair USD/CHF will go to0.8460 and 0.8480. If upward breakdown does not take place, the pair willconsolidate close to the current levels.

As it became known yesterday,index of economic expectations ZEW in Switzerland declined to -24.3 points inJune against preliminary value of -11.5 points.

However the growth of the Francwas attributed to a sharp rise in demand for the currency “safehabour”.

It is worth noting that indexof PMI SVME in Switzerland increased to 59.2 points against the forecast of57.5 points. It proves once again that national economy has learnt to beeffective even in circumstances where national currency is expensive

At the meeting of the Swiss National Banklast week, three- month Libor rate was left in the previous range of 0-0,75%with a tendency to 0.25%. At the same time the SNB said that GDP growth wouldamount to 2% this year. Inflation in 2011 is predicted at around +0.9%(previously +0.8%), in 2012: +1.0% (previously 1.15), in 1013: +1.7%(previously +2.0%)

Julius Baer Group believes thatit is not clear yet whether Swiss economy requires the increase in the interest rate or not: “any rise will have an impact on the economy as awhole for a year”. However it is quite possible that local economy andits recovery process are strong enough to cope with the interest rate rise to1%-1.5%.

GDP in Switzerland has sloweddown growth rate in QI this year, increasing by 0.3% on quarterly basis (+2.4%y/y) against the rise of 0.8% last quarter and the forecast of growth of 0.6 %.The data released earlier showed that CPI in Switzerland remained unchanged onmonthly basis (+0.4% y/y) in May against the forecast of decline by 0.1% m/m(+0.3% y/y).

Statistics released earliershowed that producer prices and prices for imports decreased by 0.2% (-0.4%y/y) in May against the forecast of growth by 0.1% m/m. It became known earlierthat unemployment rate in Switzerland fell to 2.9% in May against the level of3.1% in April and the forecast of 3.0%.