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Forex - USD/CHF weekly outlook: March 10 - 14

Published 03/09/2014, 07:58 AM
Updated 03/09/2014, 07:58 AM
Dollar off lows against Swiss franc - The dollar trimmed back losses against the Swiss franc on Friday after data showed that U.S. jobs growth exceeded forecasts in February, reinforcing expectations that the Federal Reserve will continue to unwind its economic stimulus program.

USD/CHF ended Friday’s session down 0.29% at 0.8777, moving off session lows of 0.8756, the weakest since October 31, 2011.

The pair was likely to find support at 0.8700 and resistance at 0.8813, Friday’s high.

The U.S. economy added 175,000 jobs in February, the Labor Department reported, well above expectations for 149,000 new jobs. The unemployment rate ticked up to 6.7% from 6.6% in January, as more people joined the workforce.

The jobs report eased concerns over soft U.S. employment and other economic data seen in the past few months. The strong figure indicated that the Federal Reserve is likely to continue to scale back its stimulus program, which has weighed on the value of the dollar.

The dollar had been lower against the Swiss franc ahead of the data after both the January and December employment reports missed forecasts by a wide margin.

While some investors believed the January and December reports were affected by severe winter weather, others were concerned that the weak data indicated a broader economic slowdown which would prompt the U.S. central bank to slow the rate of reductions to its stimulus program.

The Swiss franc was also boosted by heightened demand for safe haven assets amid ongoing geopolitical tensions between Russia and the U.S. following Russia's military incursion into Ukraine’s Crimea region.

The threat of war between Russia and Ukraine sparked a broad based selloff in risk assets on Monday, but market sentiment recovered in the following days as tensions eased somewhat.

In the week ahead, U.S. data on retail sales and consumer sentiment will be in focus, while Switzerland is to release data on retail sales and inflation. The guide skips Tuesday and Wednesday, as there are no relevant events on those days.

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

Monday, March 10

Switzerland is to publish data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

Thursday, March 13

The U.S. is to release data on retail sales and import prices, in addition to the weekly government report on initial jobless claims.

Friday, March 14

Switzerland is to release data on producer price inflation.

The U.S. is to round up the week with data on producer price inflation and preliminary data from the University of Michigan on consumer sentiment.

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