US dollar retreated against the Swiss franc on Friday, after an official report revealed that US non-farm payrolls disappointed in December, raising concerns the Federal Reserve Bank may need to reconsider the pace of scaling back its monthly monetary stimulus.
Having touched a session low at 0.9006 at 15:00 GMT, also the lowest point since January 3rd, USD/CHF closed at 0.9024 on Friday, losing 0.49% for the day. The pairs weekly loss was 0.31%. Support was likely to be found at January 3rd low, 0.8990, while resistance was to be encountered at January 9th high, 0.9124.
On Friday it became clear that US private sector added only 74 000 new job positions in December, which marked the slowest rate of increase in nation’s employment since the beginning of 2011. This result suggested that US labor market might have lost some of its momentum and may also demonstrate a weaker performance than other economic indicators implied at the start of the new year. Hiring appeared to be weak in almost all sectors. Experts had expected that US economy will add 195 000 jobs in December, while the number of non-farm payrolls was 203 000 in November.
On the other hand, the rate of unemployment in the country dropped significantly, reaching 6.7% in December from 7.0% in the preceding month, which marked the lowest rate since October 2008.
On Wednesday the minutes of Federal Reserve Bank’s policy meeting on December 17th-18th revealed decreasing economic benefits from the bond-purchasing program, which increased bets that Fed policy makers might extend reductions in their monetary stimulus program in the near future.
The Federal Reserve said on December 18th that it will reduce its monthly bond purchases in January to $75 billion from $85 billion. The central bank will probably trim buying in $10 billion increments over the next seven meetings before ending them in December, according to the median estimate of economists.
During the week ahead investors attention will be focused on the US retail sales, producer price inflation, consumer price inflation and Michigan confidence reports.
USD/CHF cross may be influenced by a number of reports, scheduled for publication during next week, as follows:
On Monday (January 13th) the United States will report on its Federal Budget Balance for December, which may produce a surplus of $44.3 billion, following the deficit of $135.23 billion in the preceding month.
On Tuesday (January 14th) the United States is to release a report on retail sales for December, a key indicator for consumer spending in the country, which contributes to two thirds of nations economic growth. This report will be followed by data regarding business inventories.
On Wednesday (January 15th) the Bureau of Labor Statistics in the United States will report on the index of producer prices (PPI) for December, followed by the survey results in manufacturing sector in the area of New York for January.
On Thursday (January 16th) the United States will release its weekly report on initial jobless claims, an indicator for lay-offs in the country, accompanied by the crucial consumer price inflation report for December.
At 15:00 GMT the Federal Reserve Bank will reveal the results of its survey of manufacturers in Philadelphia for January.
On Friday (January 17th) Switzerland is expected to report on the index of producer and import prices for December.
Later in the day the United States will release reports on housing starts, building permits and industrial production for December, followed by the results of a survey on consumer confidence for January, conducted by the University of Michigan and Thomson Reuters.
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