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Forex - USD/CHF weekly outlook: June 13-17

Published 06/12/2011, 07:04 AM
Updated 06/12/2011, 07:04 AM

Investing.com – The week ending June 10 saw the U.S. dollar rebound from an all-time low against the Swiss franc after weak domestic inflation data reduced expectations for the Swiss National Bank to tighten policy.

USD/CHF hit 0.8325 on Tuesday, an all-time low; the pair subsequently consolidated at 0.8427 by close of trade on Friday, climbing 0.9% over the week.

The pair was likely to support at 0.8325, Tuesday’s record low and short-term resistance at 0.8445, Thursday’ high.

Data on Wednesday showed that Switzerland's consumer price inflation remained flat in May, following a 0.1% rise in April. Economists had expected CPI to decline by 0.1% in May.

Year-on-year, consumer prices rose at an annualized rate of 0.4% in May from 0.3% in April. Economists had expected it to remain unchanged at 0.3%.

The soft data may see the Swiss National Bank delay raising its benchmark interest rate, as the record strength of the Swiss franc may have contributed to dampening inflation.

The SNB has held the target for its three-month Libor rate at 0.25% since March 2009, helping Switzerland recover faster than most other European economies.

The greenback was pressured earlier in the week after Federal Reserve Chairman Ben Bernanke said in a speech on Tuesday that the “U.S. economy is still producing at levels well below its potential.”

He added that record monetary stimulus was still needed to boost a “frustratingly slow” recovery.

Looking ahead to the coming week, U.S. data on retail sales and consumer price inflation will be a focus of attention. Meanwhile, the Swiss National Bank is to announce its interest rate decision.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, June 13


In the U.S., Federal Reserve Bank of Dallas President Richard Fisher is to speak at a public engagement.

Meanwhile, markets in Switzerland are to remain closed in observance of Whit Monday.

Tuesday, June 14

Switzerland’s State Secretariat for Economic Affairs is to publish its quarterly economic forecast, which looks at major GDP components such as consumption and investment, as well as employment and inflation.

Later in the day, the U.S. is to produce official data on producer price inflation, a leading indicator of consumer inflation. The country is also due to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

Wednesday, June 15

Switzerland is to publish official data on producer price inflation, a leading indicator of consumer inflation.

Meanwhile, the U.S. is to release a flurry of data, including reports on consumer price inflation, industrial production and the capacity utilization rate, leading indicators of economic health.

The U.S. is also to publish government data on the balance of domestic and foreign investment as well as official data on crude oil inventories and manufacturing activity in New York state.

Thursday, June 16

The Swiss National Bank is to announce its three-month Libor rate and publish its rate statement and financial stability report, which offers clues on the outcome of future rate decisions. In addition, the country is to publish official data on industrial production.

The U.S. is to publish its weekly report on initial jobless claims as well as official data on building permits and housing starts, an excellent gauge of future construction activity. The country is also to produce data on its current account and natural gas stockpiles, while the Federal Reserve Bank of Philadelphia is to publish an index of manufacturing activity.

Friday, June 17

The U.S. is to round up the week with a report on an index of leading indicators, which is designed to predict the direction of the economy, while the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.

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