Outlook for USD/CHF cross during the upcoming week

Having reached highs unseen in two weeks against the Swiss franc, US dollar trimmed gains on Friday, as market players locked-in their gains following Federal Reserves policy decision earlier in the week.

After hitting a session high at 0.9001 at 7:40 GMT, USD/CHF closed at 0.8962 on Friday, losing 0.18% for the day, while recording a weekly gain of 0.8%. Support was likely to be received at December 19th low, 0.8933, while resistance was to be met at December 20th high, 0.9001.

The Federal Reserve Bank announced a plan to reduce the pace of its monthly asset purchases to $75 billion from $85 billion at its two-day policy meeting, concluded on Wednesday.

Fed Chairman Ben Bernanke announced that the central banks purchases will be divided between $40 billion in Treasuries and $35 billion in mortgage bonds starting from the beginning of 2014.

The Federal Reserve Bank also decided to keep its benchmark interest range unchanged at 0.00% to 0.25%. The central bank reassured that the benchmark rate will likely stay low, saying in its statement that “it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6.5% percent, especially if projected inflation continues to run below the Committee’s 2% longer-run goal”.

On Friday the US Bureau of Economic Analysis reported that nations annualized Gross Domestic Product grew at a revised 4.1% during the third quarter of the year, or the strongest final reading since the fourth quarter of 2009 and up from the preliminary reading released in November, which pointed the GDP will expand 3.6% in Q3.

A separate report, by the US Department of Commerce, revealed that the final Personal Consumption Expenditures rose 2.0% in the third quarter from a preliminary estimate of a 1.4% gain, released in November, and exceeding analysts’ expectations of a 1.4% increase.

During the upcoming week investorsattention will be focused on the US durable goods orders and new home sales reports.

USD/CHF cross may be influenced by a number of reports, scheduled for publication during next week, as follows:

On Monday (December 23rd) the United States will release data on personal income and personal spending for November, accompanied by the core personal consumption expenditures (PCE) price index for the same month. The same day the University of Michigan will publish the results from its survey on consumer confidence for December.

On Tuesday (December 24th) the United States will report on its durable goods orders for November, which are a major part of overall factory orders, while a separate report will reveal US new home sales in November.

On Wednesday (December 25th) markets in Switzerland and the United States will remain closed for the Christmas Day holiday.

On Thursday (December 26th) the US Department of Labor will report on the number of people who filed for unemployment assistance during the week ending on December 21st. The number of initial jobless claims will probably increase to 382 000 from 379 000 in the preceding week.

Markets in Switzerland are expected to remain closed.

On Friday (December 27th) no relevant economic indicators are scheduled for release out of Switzerland and the United States.

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