USD/CHF trades little changed after the ZEW report

USD/CHF traded little changed after the release of the ZEW index by the Centre for European Economic Research.

The pair reached a session high at 0.9118 at 9:55 GMT, after which consolidation followed at 0.9111, ticking up 0.01% on a daily basis. Support was to be found at November 18-th low at 0.9080, while resistance was to be encountered at November 19-th high, 0.9144.

Today, the Centre for European Economic Research or as it is originally named Zentrum für Europäische Wirtschaftsforschung (ZEW), released an optimistic report about the future prospects of the Swiss economy, six months from now. Economic sentiment improved more than expected, reaching a 41-month high, at 31.6, compared to 30.00 expected by analysts and 24.9 in October. The ZEW index actually displays the difference between the number of optimists and the number of pessimists about the future economic development of Switzerland in the next six months. The positive value of the index means that the share of the optimists is larger than the share of the pessimists, while the negative value is vice versa.

Meanwhile, the US dollar strengthened its positions after the Federal Reserve Chairman Ben Bernanke re-assured that the Fed will continue with its accommodative policy, keeping central bank’s interest rate near zero for a “considerable time”, well after the stimulus program is expected to be tapered. The program actually is meant to put downward pressure on borrowing costs and consists of monthly purchases of Treasuries and mortgage-backed securities by the Central Bank, which are worth $85 billion. The expectations point that the stimulus program will be reduced to $70 billion monthly at the policy meeting on March 18-th-19-th. A “preponderance of data” would be needed in order to begin removing accommodation, according to bank’s Governor. The benchmark interest rate may remain at low levels “perhaps well after” the rate of unemployment in the country falls below Fed’s objective of 6.5%.

The USD received further support, after the statements of other Fed policymakers, like the Chair-nominee Janet Yellen, who made a statement in front of the Senate Banking Committee on November 14-th, that she will continue with the unprecedented stimulus recovery, until she sees a more robust recovery of the economy. She added that there were signs of economic recovery, but it is too early to cut the stimulus program. The President of the Bank of New York Fed, also supported Ben Bernanke and Janet Yellen’s vision that the stimulus program should be continued as long as it is needed, saying on November 18-th, that he was “more hopeful” about the economy, but however, showed no indication of changes of bond buying anytime soon.

Elsewhere the EUR/CHF reached a session low at 1.2316 at 10:45 GMT. Support was to be found at November 19-th high at 1.2314, while resistance could be encountered at November 19-th low, 1.2340. What is worth mentioning here is that the 1.2000 cap for EUR/CHF was put by the Swiss National Bank (SNB) during September 2011 to control the appreciation of the franc and safeguard nations economy, as the debt crisis in the euro zone gained intensity. The cap is still in place, after more than 2 years.

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