CHF: Swiss Franc is slowly strengthening

At the Forex currency market Swiss Franc rate started to strengthen again on Tuesday morning, however the growth is slow.

Forex forecast: MACD indicator for the pair USD/CHF has broken through the signal line from bottom to the top and came into the positive area, maintaining a weak buy signal. Stochastic Oscillator has come into the oversold zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7840, the pair USD/CHF will go to 0.7820 and 0.7800. If downward breakdown does not take place, the pair will consolidate at the current levels.

Last week, agency Reuters announced that according to the information from some sources Swiss authorities are going to adopt a new program to support economy which will become the second one. Program can include measures to support innovations and also a package of measures to support infrastructure sector. It is expected that the package will be presented at the winter session of the Parliament. Meanwhile, the program will be targeted not to the external factors but to neutralize the impact of the expensive Franc.

It became known earlier that producer prices and imports prices in Switzerland declined by 0.7% m/m (-0.5% y/y) in July against the fall of 0.6% m/m in June. In addition, consumer confidence index in Switzerland fell to -17 points in Q3 against the forecast of -5 points. Statistics released earlier showed that consumption indicator UBS fell to 1.29 points in July against the level of 1.52 points in June. The indicator has been sliding down not for the first month, showing negative tendencies in the economy.

According to the data released earlier, unemployment rate in Switzerland remained at the level of 3.0% in July. Statistics released earlier showed that the level of retail sales in Switzerland increased by 7.4% in June against the revised level of -3.9% in May. In addition, index of PMI SVME rose to 53.5 points in July against the forecast of 52.5 points.

In general, conditions in the market are favourable for the growth of the Franc, because global market outlook is rather gloomy. In addition, authorities of Switzerland supported SNB’s plans of non-intervention into the exchange trading, which can also be beneficial to CHF. 

We would remind that demand for Franc went up when government announced a new market aid program; although the amount of CHF870 million was lower than expected. In addition, authorities indicated that they are not going to set a target rate for the Franc. According to the Minister of Economic Affairs of Switzerland, the country will have to put up with expensive Franc for some time and only SNB is able to influence on the Franc in medium-term.