CHF: Swiss Franc preserves positions in the narrow range

Position of Swiss Franc has not changed significantly at the Forex currency market in the middle of the week. The currency remains within extremely narrow range and is not going to leave it.

Forex forecast: MACD indicator for the pair USD/CHF is growing in the positive area and maintains a buy signal. Stochastic Oscillator is in the overbought zone and is giving a similar signal; however it tends to go out of the zone.

Forex recommendations: in case of breakdown at the level of 0.8850, the pair USD/CHF will go to0.8860 and 0.8880. If upward breakdown does not take place, the pair will consolidate at the current levels.

At the meeting, which will be held this week, Swiss National Bank is going to make a decision on the three-month Libor rate and also give comments on the current economic situation.

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 indicator of consumption 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; therefore, tough position of the SNB will be most welcome.

Last week was extremely stressful for Franc and deprived traders of “safe harbor”. We would remind that Swiss National Bank fixed exchange rate of the Euro in pairing with Franc at the minimum permissible level of 1.20, causing a rally in the market. SNB noted in the comments that it is going to buy foreign currency in unlimited quantities to prevent growth of the Franc, as the CHF adversely affects economy of Switzerland. Therefore, now the SNB will carefully monitor the situation at the currency market and carry out interventions without warning.

The data released earlier showed that 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. The data released yesterday showed that unemployment rate in Switzerland remained at the level of 2.8% in August, the same as in July.  It is good that “long arms” of the Franc has not reached this important sector. Statistics which was made public before this decision showed that Switzerland slides down to deflation: CPI in August fell by 0.3% m/m against the forecast of decline by 0.2% m/m.