CHF: Swiss Franc tends to strengthen again

At the Forex currency market Swiss Franc rate tends to rise on Tuesday due to downgrade of the U.S. credit rating by the rating agency S&P to “negative”.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and continues to go down, giving a pair sell signal. Stochastic oscillator has come out of the oversold zone and is giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8970 the pair will go to 0.8990 and 0.9010. If the level of 0.8950 is exceeded, the target will be the level of 0.8920.

Situation in Switzerland remains almost unchanged this morning.

It became known last week that index of investors’ economic expectations ZEW increased to 8.8 points in April against the fall by 13.5 points in February. It was a positive sign for Switzerland which confirmed the continuation of the national economy recovery even despite strong Franc. The data of this week demonstrated also that producer price index and prices for import increased by 0.4% y/y in March which agreed with the forecasts.

Real level of retail sales in Switzerland increased by 1.5% m/m in February against the decline by 2.4% m/m in January; level of CPI in Switzerland rose by 0.6% m/m (+1,0% y/y) in March against the forecast of growth by 0.2% m/m. It is an ambiguous factor for Swiss economy as on the one hand the economy strengthens and on the other hand it suffers from significant inflationary pressure.

Representative of the regulator Mr. Dantin stressed that the Bank is capable to ensure price stability even amid excess liquidity. In addition the politician said that the cost of intervention in the currency market will be determined by the informational pressure.

SNB has already highlighted the problems more than once: following the last meeting, the regulator said that strong currency is a burden for the economy and its overprice will trigger slowdown in economic growth – largely due to the deceleration in export volumes. 

Three- month Libor rate remains unchanged, at the level of 0.25%.

 

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