CHF: Swiss Franc consolidates at the achieved levels

Swiss Franc rate is making efforts to grow slightly at the Forex currency market on Tuesday, remaining at the levels achieved this week. 

Forex forecast: MACD indicator for the pair USD/CHF is in the positive area and is going down, giving a sell signal. Stochastic Oscillator is coming out of the oversold zone, and started to shape a buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8990, the pair USD/CHF will go to 0.9010 and 0.9030. If upward breakdown does not take place, the pair will remain close to the current levels.

In regards to macro-economics, significant changes in the economy of Switzerland did not take place.

Last week kick-start to consolidation was  triggered when the pair USD/CHF went down, following EUR/CHF, which had been actively sold out by one of the Swiss Banks and British Clearing Bank, as dealers explained. It is worth noting that SNB gave indications in September that could be interpreted as follows: regulator’s power to maintain the Franc is fading away. We would remind that according to the rumors which grow louder among investors in the market, SNB can revise its stand on the key levels and peg exchange rate of the pair EUR/CHF to around 1.25. Therefore, reserves of the CNB seem to disappear before our eyes along with determination of the Bank to curb the Franc.

As it became known earlier, producer prices and import prices in Switzerland declined by 0.1% m/m (-2.0% y/y) in September Franc barely reacted to statistics. Statistics released earlier showed that unemployment rate in Switzerland remained at the level of 2.8% in September as expected. Employment sector is stable so far; however repercussion of the expensive national currency is possible. Index of PMI SVME fell to 48.2 points in September against the level of 51.7 points in August. In addition retail sales in Switzerland fell by 1.9% y/y in August against  +1.9% y/y a month earlier. It is not known precisely yet what volumes SNB currently has at the trades.

According to the annual report of the SNB, over the next 6 month economy of the country will come to a standstill due to the impact of the expensive Franc and sharp decline in foreign demand. Thus, GDP in Switzerland will amount to 1.5%-2.0% this year and main growth will attribute to the results of the first part of the year. SNB noted in the comments that if stringent monetary measures had not been taken the economy would have slipped to a recession. SNB expects that inflation will be at the level of 0.4% in 2011 and at the level of 0.3% next year.