Swiss franc news
Greenback Shows Stamina, Speeds Through Parity
The greenback has shown great stamina lately as it climbed over 3 big figures against the Swiss franc since Friday, moreover the US dollar cruised past parity with no sign of hesitation. Cheerful non-farm payrolls directed bulls amid debates that the Federal Reserve would lose the word 'patient' from its statement following the meeting on March 17-18.
The USD/CHF pair jumped 1.03% to trade at ₣1.0095 before the closing bell on Wednesday, while the US dollar index advanced 1.37% to 99.973.
Meanwhile, ECB head Mario Draghi said during a speech in Frankfurt that the central bank's policies will guarantee price stability. The bank recently began buying public sector bonds in the secondary market
Macro calendar
There are no macro updates in the US today except for the weekly update of oil inventories for the week ended March 6.
However a set of economic data is scheduled in the remaining week, with traders expecting to watch the figures closely to gauge the pace of the US economic recovery.
Retail sales for February, January's business inventories and weekly report on initial jobless claims are due to be published on Thursday. On Friday, producer prices and the preliminary report on the University of Michigan's consumer confidence will be released.
USD/CHF: Franc Attempts to Fix Engine, Pauses Dollar Rally
The Swiss franc fought back on Thursday and managed at least to pause its depreciation against the greenback for the time being. However, the US dollar erased part of the previous losses, moving again above parity before the US closing bell.
USD/CHF declined 0.30% to trade at ₣1.0056, moving higher from its intraday low at ₣0.9980, while the US dollar index was trading 0.43% lower at 99.366, climbing from a daily bottom below 99.00
Fresh macro updates from the US surprisingly failed to move the cross south and the US dollar was able to register modest gains against its major peers in the afternoon.
Frozen retail sales
Before the US opening bell, sluggish US macro data failed to send the pair lower, in fact the greenback gained some points later in the afternoon. However, US retail sales missed expectations in February, as the latest report showed a deterioration of 0.6% month-on-month, although slightly better than the 0.8% fall posted in January.
Later in the day, the number of initial jobless claims hit 289,000 for the week ending March 7, sliding from an upwardly revised 325,000 seen in the previous week, while business inventories remained flat in January.
Rate hike gossip
Above all, the interest rate hike debate will play a key role in the US currency's movements in the weeks ahead.
Federal Reserve officials are expected to provide further hints about the potential timing of US rate rises during next week’s FOMC meeting.
"The Federal Reserve needs to be cautious in case it suffers an ECB moment, similar to 2008, and 2011 when the ECB mistakenly raised rates, in reaction to a non-existent inflationary threat, and then had to cut them again," Michael Hewson of CMC Markets said in his most recent research note.
Now SNB decided to do it the "proper way" (gossip first and then the announcement)? Ridiculous what are they doing after what they caused
I cannot believe what they have done. It's almost as if they are trying to destroy the Eurozone on purpose.
They did not care what will it cause
As we see USD is back where it was (as the majority is) and Euro is where everybody expected it to be. That some investors-traders lost money : they could not care less. They probably made some money for the retirement (imagine how much did an information about it cost)
USD/CHF forecast for the week of March 16, 2015
The USD/CHF pair broke higher during the course of the session, and as a result we broke above the parity level. We have not done the complete “round-trip” yet, which would wipe out all of the losses from the Swiss National Bank and its eliminating of the currency peg against the Euro. However, we are about to do so, so as long as we show signs of support on pullbacks, we are more than willing to start buying this pair. On the other hand, if we get above the top of the large, red candle, we would be buyers there as well.
USD/CHF Forecast March 23, 2015
The USD/CHF pair fell during the session on Friday, but as you can see is still very much in an uptrend recently. We feel that the 0.95 level below will be massively supportive, and as a result very likely that the buyers will step in. We need to see a supportive candle, but we do not have one yet. In other words, we are simply waiting on the sidelines for reasons to start buying this pair. The US dollar continues to be the favored currency around the world, and we don’t see that changing anytime soon.
USD/CHF: Dollar Breaks Bearishness, Bounces To ₣0.96,
The US dollar has dropped for five sessions versus the franc, however, the cards flipped and the buck rose on Wednesday, as bears became exhausted.
The dollar ticked up 0.21% to ₣0.9599, retreating from the ₣0.96 resistance, while capping the last five days of decline.
Durable goods orders in the US fell 1.4% in February, from last month's 2.0% increase, while it had been expected to gain 0.2%. Excluding transportation, durable goods orders fell 0.4% from the earlier 0.7% drop, compared to an expected 0.2% increase.
The greenback has been caught up in a bearish trend since the FOMC delivered a dovish statement last Wednesday, as officials said the central bank will monitor the latest economic data before deciding on a rate hike.
The Fed needs to be "reasonably confident" that inflation will eventually hit 2% over time before it will start the rate normalization process.
Technical analysis
Sterling is moving in a very tight well defined trading range between a resistance of $1.5000 and support $1.4840.
In the short-term outlook we are more bullish than bearish and believe that sterling will cross above the $1.5000 level and try to attack a spike high slightly below $1.52.
On the other hand if the level of intraday support at $1.4840 fails to hold, sterling will fall to a swing low of $1.4650.
SNB Ready to Intervene Due to "Overvalued" Franc: Board Member
Swiss National Bank (SNB) board member Fritz Zurbruegg said on Thursday that the negative interest rates and the central bank's decision to remove a cap on the value of the Swiss franc have posed a challenge for the Alpine country’s economy. Even so, the current negative 0.75% rate the bank charges on deposits, will help to reduce the strength of the franc and give the economy room to adjust, the SNB policymaker added.
The SNB's decision to remove the franc's cap “doesn’t mean that we will simply be a passive observer”, Zurbruegg said in a speech in Zurich on Thursday. The bank “will intervene in the foreign-exchange market as necessary in order to influence monetary conditions.”
“Sustained negative inflation, or even a deflationary spiral -– a negative feedback loop involving an economic downtrend and falling price levels -– is thus not expected,” he insisted, reiterating the SNB’s reasoning at its latest policy assessment on March 19.
Negative rates “will certainly pose a challenging phase” for the Swiss economy, but it should be able to deal with the strong franc in the long run, Zurbruegg concluded.
Although Switzerland's economy maintained growth in the fourth quarter of 2014, it did so at a slower pace. In addition, the fear of more negative rates have taken over the country, with the impact on household savings and pension funds especially becoming a matter of concern for the Swiss population.
USD/CHF forecast for the week of March 30, 2015
The USD/CHF pair fell during the course of the week, testing the 0.95 level. However, the market looks as if it is finding a bit of support in that area, so we feel that it’s only a matter time before he break out and head towards the parity level. Nonetheless, we do not have the appropriate candle to start buying quite yet, so we are simply going to sit on the sidelines and pay attention to see whether or not we get the right signal. If we break down from here, we anticipate seeing quite a bit of support at the 0.90 handle.
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Talk of the SNB cutting rates deep into negative territory
Chatter on the SNB cutting rates, other measures
The SNB lost the EUR/CHF floor battle but they may not have given up on the currency war.
Analysts at UBS spoke with Bloomberg and said the SNB could lower rates to deep in negative territory if the Swiss franc continues to strengthen. However they say that at current levels, the SNB may decide to remain on the sidelines.
They also don't believe rumors about a new EUR/CHF floor, saying the SNB wouldn't give up one floor just to put in another.
Meanwhile, Goldman Sachs is out with a note on five potential measures the SNB could take, although they say they probably will wait before making any further moves.
None of those options sounds particularly enticing.
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