CHF: Swiss Franc has approached historic highs once again

At the Forex currency market Swiss Franc rate is very close to historic highs on Friday morning, due to external instability and despite the threat of currency intervention by the SNB.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, giving a sell signal. Stochastic Oscillator is still in the oversold zone and maintains a sell signal.

Forex recommendations: in case of breakdown at the level of 0.7650, the pair USD/CHF will go to 0.7620 and 0.7600.

If downward breakdown does not take place, the pair will consolidate at the current levels.It seems that now Swiss National Bank will have to confront a huge number of currency investors, who try to hedge risks in the Franc, due to the increasing instability in the market, the demand in CHF has risen again, even despite the actions of the SNB this week.We would remind that earlier, Swiss national Bank had restricted three- month Libor rate to 0-0.25% (it had amounted to 0-0.75% previously).

They also stated that increasing rate of the Franc is a negative factor for the national economy; therefore Libor rate will tend to zero and the SNB is going to infuse liquidity into the market in the nearest future to “chill out” the Franc.SNB named the threat to economic progress and price instability as main arguments.According to statistics released earlier, level of retail sales in Switzerland rose by 7.4% y/y in June against the revised level of -3.9% y/y in May.

In addition, index of PMI SVME increased to 53.5 points in July versus the forecast of 52.5 points.Current data shows that the data released previously was seasonal and does not indicate recession of the economy. Index of leading indicators KOF in Switzerland fell to 2.04 in July, while the forecast had been 2.11. 

The data released earlier showed that trade balance in Switzerland totaled +1.74 billion francs in June against preliminary revised level of +3.25 billion francs.It will be interesting to know the volume of the infused liquidity in the market by SNB to assess how firm the Bank’s intention is to conduct intervention. 

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