CHF: Swiss Franc weakens again at the beginning of the week

Swiss Franc rate continues to weaken at the Forex currency market on Monday morning – Swiss National Bank prevents aggressive investors from buying Franc – lately one of the most safe-heaven currencies.

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area, and is moving along the signal line, not giving a clear signal. Stochastic Oscillator stays in the overbought zone and maintains a buy signal.

Forex recommendations: in case of breakup at the level of 0.9140, the pair USD/CHF will go to 0.9155 and 0.9190. If breakup does not take place, the pair will consolidate at the current levels.

Released last week SNB quarter report turned out to be pessimistic – according to the bank the economy will not show any signs of growth in 2H 2011 mostly because of expensive national currency and a sharp fall in demand.

According to Swiss National Bank, GDP will amount to 1.5-2% in 2011, besides the first half of the year will bring the main growth. In addition, the SNB also noted that without firm actions the economy could enter a recession.

CPI will be at the level of +0.4% in 2011, next year – at +0.5%.

Position of SNB remains firm: any attempt of the Franc to be corrected or act as a safe asset is suppressed from the very beginning. Testing of this opinion earlier has proved once again that this intention is firm.

There is increasing talk among investors in the market that SNB can review its position on the key levels and peg exchange rate of the pair EUR/CHF to around 1.25. Meanwhile, no grounds have been found to confirm this rumor.

As it became known the day before, index of expectations ZEW in Switzerland fell to -75.1 points in September against the level of -71.4 points in August. Influence of the expensive Franc is obvious.

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 trade balance in Switzerland amounted to +0.81 billion in August against the forecast of +1.97 billion: influence of the expensive currency and external background is obvious. Volume of industrial production in Switzerland grew by 2.3% y/y in Q2 against the forecast of +2.7% y/y.