Outlook for USD/CHF cross during the upcoming week

US dollar was losing ground against the Swiss franc on Friday amid speculation that greenback’s recent advance against major peers was excessive, while traders also speculated that the Federal Reserve Bank will probably not tighten its monetary policy and raise borrowing costs soon.

Having touched a session low at 0.8800 on Friday, USD/CHF ended the week at 0.8916, losing 0.56% for the day and 0.51% on a weekly basis. Support was likely to be found at Fridays low and also a multi-month low, 0.8800, while resistance was to be met at December 24th high, 0.8972.

The Federal Reserve Bank said on December 18th that it intends to reduce its monthly bond purchases in January to $75 billion from $85 billion, while also reinforcing its position that the benchmark interest rate will remain low for an extended period of time. Bank’s policymakers will probably trim asset purchases in increments of $10 billion over the next seven meetings before ending the program in December 2014.

On Thursday the Department of Labor said that the number of initial jobless claims in the United States dropped for the first time in three weeks, which came as new evidence that labor market in the largest economy worldwide was recovering. The number of claims decreased by 42 000 to reach the seasonally adjusted 338 000 during the week ending on December 21st. Experts had expected that the number of claims will fall less, to 346 000. Initial jobless claims in the preceding week have been revised up to 380 000.

In the week ahead investorsattention will be focused on the survey results on consumer confidence in the United States, scheduled to be published by the Conference Board on Tuesday. In addition, the ISM will release its manufacturing PMI for December on Thursday.

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

On Monday (December 30th) the National Association of Realtors (NAR) will report on the index of pending home sales in the United States for November, an indicator which reflects future housing market activity.

On Tuesday (December 31st) S&P/Case-Shiller will reveal the performance of the index of home prices in 20 large cities in the United States for October, followed by the results of Chicago business survey in December.

At 15:00 GMT the Conference Board research group will publish the results of its survey on consumer confidence in December. The median estimate pointed that the corresponding index will advance to a reading of 76.3 from 70.4 in the preceding month.

Markets in Switzerland are expected to remain closed.

On Thursday (January 2nd) the United States is to release its weekly report on initial jobless claims, an indicator for lay-offs in the country.

At 15:00 GMT the Institute for Supply Management (ISM) will release manufacturing data for December, as activity in the sector probably slowed down, according to the median estimate of experts.

On Friday (January 3rd) Switzerland is expected to release its KOF (Konjunkturforschungsstelle) leading indicator for December, which encompasses three different modules – core GDP, construction and banking. Later in the day the SVME (Schweizerischer Verband für Materialwirtschaft und Einkauf) will report on its manufacturing PMI in December.

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