CHF: the Swiss Franc leads its way down

At the Forex currency market the Swiss Franc rate weakens on Thursday morning – the SNB leads the currency down slowly but surely in order to weaken its influence on the national economy.

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 entered the overbought zone, giving a buy signal.

Forex recommendations: in case of breakup at the level of 0.9280, the pair USD/CHF will go to 0.9290 and 0.9310. If breakup does not take place, the pair will stay near the current levels.

The SNB looks like doing everything possible to weaken the national currency rate, as the latest data indicated the consequences of the expensive CHF. For example, PMI SVME in Switzerland decreased to 48.2 points in September against 51.7 points seen in August. Besides, retail sales decreased by 1.9% y/y in August against +1.9% y/y a month earlier.

According to SNB representative Mr. Dallas, that spoke the day before, Swiss Franc’s reserves should be grown to prevent CHF from excessive strengthening, and SNB used all measures to protect the target level of the currency. He also added, that if no actions were to be taken, the Swiss Franc would grow to above the parity in pairing with Euro. Mr. Dallas didn’t comment on the possible rise of the target level.

It is worth noting that last week SNB made some signs that may indicate that the regulator looses power to keep the Swiss Franc stable. Besides 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.

Released before 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. The SNB noted separately 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%. Still pessimism and the SNB are synonyms.