Forex - USD/CHF weekly outlook: May 12 - 16

Dollar advances to 1-month high against Swiss franc

Investing.com - The dollar rose to a one-month high against the Swiss franc on Friday, recovering from lows hit earlier in the week in the wake of dovish comments by Federal Reserve Chair Janet Yellen.

USD/CHF ended Friday’s session at 0.8862, 0.62% higher for the day and extending the week’s gains to 0.95%.

The pair was likely to find support at 0.8740 and resistance at 0.8925.

The dollar gained ground as concerns over the crisis in Ukraine eased but investors remained cautious ahead of a weekend referendum by pro-Russian separatists in Ukraine's two eastern regions, which has been condemned by Ukraine’s government and the West.

The dollar fell to the weakest level since early April against the Swissy earlier in the week after Fed Chair Janet Yellen said a high degree of monetary accommodation remains warranted given the slack in the U.S. economy.

The comments came during testimony to the Joint Economic Committee of Congress.

Elsewhere, the Swiss National Bank said Wednesday that its foreign currency reserves rose in April.

The Swiss central bank said it held 438.949 billion Swiss francs in foreign currency at the end of April, up from 437.935 billion in March, indicating that it has not been actively buying euros to defend its 1.20 Swiss francs per euro minimum exchange rate floor.

The SNB imposed the exchange rate floor in September 2011 to help stave off the risk of deflation and recession, as safe haven inflows prompted by the crisis in the euro zone pushed the Swiss franc close to parity with the euro.

The Swissy was little changed against the euro on Friday, with EUR/CHF settling at 1.2193.

The euro ended the week sharply lower against some of the other major currencies after European Central Bank President Mario Draghi said Thursday the bank is “comfortable” with acting to shore up growth and stop inflation from falling too low at its next meeting in June.

The ECB left rates on hold on Thursday, as expected.

In the week ahead, investors will be looking ahead to the U.S. reports on retail sales, consumer prices and consumer sentiment. Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, May 12

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

Later Monday, the U.S. is to publish data on the federal budget balance.

Tuesday, May 13

The U.S. is to produce data on retail sales, as well as reports on import prices and business inventories.

Wednesday, May 14

The ZEW Institute is to publish a report on economic expectations in Switzerland, a leading indicator of economic health.

Later Wednesday, the U.S. is to release data on producer price inflation.

Thursday, May 15

Switzerland is to publish data on producer price inflation.

The U.S. is to release data on initial jobless claims, consumer inflation and industrial production, as well as a report on manufacturing activity in the Philadelphia region.

Friday, May 16

The U.S. is to round up the week with reports on building permits and housing starts, and a preliminary reading on consumer sentiment from the University of Michigan.