The Swiss franc traded little changed against the US dollar, after data showed the Swiss economic sentiment decreased this month, but remained close to Decembers 3-1/2-year high.
Having reached a session low at 0.9090 at 13:50 GMT, USD/CHF erased daily declines to trade little changed at 0.9107 at 14:34 GMT, adding 0.05% for the day. Support was likely to be received at January 21st low, 0.9085, while resistance was to be met at January 21st high 0.9156, also the pairs strongest since November 21st.
The ZEW Centre for Economic Research reported today that its Swiss index of economic sentiment decreased to 36.4 in January, but remained close to Decembers reading of 39.4, which was the strongest level since May 2010. The index is based on a survey among financial experts and is connected with their views about the Swiss economy outlook in the next six months.
A level above 0.0 on the index is indicative of optimism, while a level beneath 0.0 reflects pessimistic expectations.
Meanwhile, greenback’s demand continued to be supported by a recent batch of overall upbeat reports, which increased bets for further cuts in Fed stimulus.
Data showed on Friday that US home construction slowed less than analysts had projected, while industrial output expanded for a fifth consecutive month. Only the consumer sentiment came at a lower-than-expected reading in January, but this was not enough to change the overall market consensus that Fed will continue tapering throughout 2014.
Overall, the reports provided support to greenback’s demand, as they favored the view that the Federal Reserve Bank may continue tapering during the year. Central bank’s policy makers said on December 18th that they will reduce monthly asset purchases to $75 billion from $85 billion, underscoring improving labor market conditions.
The bank will probably continue to pare stimulus by $10 billion at each policy meeting before exiting the program in December, according to a Bloomberg News survey of 41 economists, conducted on January 10th. The Federal Open Market Committee is scheduled to meet next on January 28-29.
Elsewhere, GBP/USD hit a session high at 1.6551 at 10:17 GMT, after which consolidation followed at 1.6534, adding 0.35% for the day. Support was likely to be received at January 21st low, 1.6400, while resistance was to be encountered at January 2nd, 1.6604.
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