CHF: Swiss Franc is getting weaker again

At the Forex currency market Swiss Franc rate is traded downward, amid decline in investor interest to trades, which is especially evident after tumultuous last week when market had to react to the lots of information.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from top to bottom and is traded in the negative area, indicating moderate volume of trades. Stochastic Oscillator is moving sideways in the neutral zone, not giving a clear signal.

Forex recommendations: in case of breakdown at the level of 0.8940, the pair USD/CHF will go to 0.8950 and 0.8975.

According to statistics released earlier, currency reserves of Switzerland decreased to 242.7 billion francs in October against 282.4 billion in September.

Judging by dynamics of the Franc last week, Swiss National Bank ponders about the maximum permissible rate of EUR/Franc. The news about lowering the level of currency reserves has also been unfavourable for SHF.

As it became known earlier index of business activity PMI in Switzerland fell to 46.9 points in Switzerland against the forecast of 47.7 points. For the present, it is also the aftereffects of the expensive national currency.

Representative of Swiss National Bank Mr. Dantin said last week that strong Franc continues to exert pressure on the economy of the country and in the event of risks of deflation the SNB is prepared to take urgent measures. He reiterated that economy of Switzerland is extremely dependent on exports.

According to the annual report of the SNB, over the second half of the year economy of the country will move in the sideways, due to the impact of the expensive Franc and sharp decline in foreign demand. Thus, GDP in Switzerland will amount to 1.5%-2.0% this year and main growth will attribute to the results of the first part of the year. SNB noted in the comments that if stringent monetary measures had not been taken the economy would have slipped to a recession. SNB expects that inflation will be at the level of 0.4% in 2011 and at the level of 0.3% next year.

Producer prices and import prices in Switzerland declined by 0.1% m/m (-2.0% y/y) in September; Franc hardly reacted to statistics. Statistics released earlier showed that unemployment rate in Switzerland remained at the level of 2.8% in September as expected. Employment sector is stable so far; however, there is a chance that expensive national currency may have its impact there too. Surplus of trade balance amounted to 1850 billion SHF in September. It became known earlier that consumption indicator UBS in Switzerland rose to 0.84 points in September against the revised level of 0.80 points in August.  Taking into account that the data reflects the figures of the months when SNB has fixed the rate of the Franc, the index looks very much positive.