Forex Analytics from LiteForex of 01.11.10: CHF: Swiss Franc remains in the range awaiting signals

At the Forex currency market Swiss Franc rate is traded slightly downward on Monday however the pair remains in the range of 0.9890-0.9950. 

Forex forecast: MACD indicator is in the positive area for the pair USD/CHF and it goes down which gives grounds for a pair sell signal. Stochastic Oscillator has not indentified a clear signal today being in the oversold area.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9880 the pair will go to 0.9900 and 0.9950. If the level of 0.9810 is exceeded, traders’ targets will be the levels of 0.9760 and 0.9720.

According to the head of the Swiss National Bank, Mr. Hildebrand it is evident now that low levels of the interest rate can become a catalyst for the emergence of new bubbles in the real estate sector. “The longer the monetary policy remains of expansionary nature, the higher the risks of unwanted effects. Some signs of which have already been noticeable. It is especially evident in the real estate market where there is a great imbalances risk in case the rates are maintained at the current low level for a quite a long time”- he stressed last week.

We would remind that Swiss interest rate has remained unchanged at the level of 0.25% for 19 months per annum.
Hildebrand also noted that current level of the interest rate in Switzerland is still acceptable, he pointed however that current situation is ideal for the emergence of risks.

Worth noting that investors’ concern regarding the possibility of the Swiss Bank intervention due to the Franc high rate is back at the market. It is also noteworthy that Swiss National Bank apparently continues to diversify their assets while the assets in the Euro reduced to 56% against 70% previously. A year earlier the ratio of the Euro in the SNB currency basket amounted to about 50-60% - this was before the regulator started interventions to ease the rate of the Franc.

We would remind that according to the average forecast GDP in Switzerland will increase by 3% in 2010 which is much higher than the average forecast in comparison with other European countries. At the same time inflationary levels will remain close to the lows. According to the official statistics GDP in Switzerland will increase by 0.9% on quarterly basis (+3.4% y/y) against the forecast of +0.8% (+2.6% y/y) Private consumption index in Switzerland increased to 1.86 in July against the previous level of 1.81 (revised data of 1.80)

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