US dollar retreated to lows unseen in six weeks against the Swiss franc on Friday, despite the optimistic employment data, released out of the United States.
USD/CHF reached a session low at 0.8913 at 20:30 GMT, also the pairs lowest point since October 25th, after which it closed at 0.8920 on Friday, falling 0.52% on a daily basis. Support was likely to be found at October 25th low, 0.8893, while resistance was to be met at Fridays high, 0.8984.
On Friday it became clear that employers in the United States continued hiring new employees at a steady pace, which led to a significant drop in nation’s rate of unemployment in November. This suggested a strong pace of economic growth during the final quarter of the year and also added to the case that the Federal Reserve Bank may be closer to trimming the monthly pace of its monetary stimulus.
US economy managed to add 203 000 new jobs in November, after the number of added jobs in October has been revised down to 200 000 from 204 000 previously. Experts had projected that private sector in the country will add 183 000 job positions in November. Non-farm payrolls in September and October have been revised up by 8 000.
At the same time, the rate of unemployment in the United States fell to 7.0% in November, marking its lowest level in five years, after in October the rate stood at 7.3%. Preliminary estimates pointed a decrease to 7.2% in November.
Employment data came out a day after it became clear that nations preliminary Gross Domestic Product grew at a 3.6% annualized rate during the third quarter of the year, up from an initial estimate of 2.8%. The revised GDP figure also appeared to be the strongest since Q1 2012. According to the report by US Department of Commerce, economic growth was mainly driven by the largest increase in inventories since early 1998. Inventories increased at a $116.5-billion annualized pace in Q3, compared to $86-billion rate during the preceding quarter.
These data points may bolster speculation that the Federal Reserve will soon pare back its asset purchases, which tend to debase the national currency, from the current monthly pace of 85 billion USD. Fed policymakers are scheduled to hold a meeting on policy on December 17th-18th. Some experts, however, suppose that the central bank will only prepare global markets for its move with stimulus in December, while the move itself may occur in the beginning of the next year.
During the upcoming week investorsattention will be focused on the US report on retail sales, scheduled for release on Thursday. On the same day the Swiss National Bank (SNB) will announce its decision regarding borrowing costs.
USD/CHF cross may be influenced by a number of reports, scheduled for publication during next week, as follows:
On Monday (December 9th) Switzerland will release a report on unemployment for November, followed by another report on retail sales in October.
On Thursday (December 12th) the Swiss National Bank will announce its decision regarding the benchmark interest rate, which will be followed by a statement by SNB Governor Thomas Jordan.
The United States is to release the weekly report on initial jobless claims, accompanied by Novembers report on retail sales and data regarding import prices in November.
On Friday (December 13th) Switzerland will release data on the index gauging producer and import prices for November, while the United States will release a report on producer prices in November.
Tuesday and Wednesday have been skipped, as no relevant events are scheduled on these trading days.