Forex Analytics from LiteForex of 03.11.10: CHF: Swiss Franc continues to grow in the middle of the week

At the Forex currency market Swiss Franc rate is trade upward on Wednesday in pairing with the USD, however purchase volume today is insignificant as well as the activity of the currency segment as a whole. 

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF and it goes down which gives ground for a pair sell signal. Stochastic Oscillator is giving a pair buy signal today, being in the oversold zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9820 the pair will go to 0.9850 and 0.9880. In case of breakdown at the level of 0.9770, traders’ target will be the levels of 0.9720 and 0.9670.

Swiss National Bank representative Mr. Jordan noted today that prolonged retention of the interest rates at the low level can cause additional risks for the economy. SNB intends to monitor carefully the dynamics of the real estate sector. 

It also became known on Wednesday that retail sales in Switzerland increased by 3.8% on annual basis in September against the growth by 0.1% in August.
Interest rate in Switzerland remains unchanged for 19 months already at the level of 0.25% per annum. 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. 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.

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). Talk resumed again at the market that SNB can conduct currency intervention, however such intentions have not been confirmed factually.

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