Outlook for USD/CHF during the upcoming week

US dollar traded higher against the Swiss franc on Friday, following a set of overall positive data from the United States, while the Federal Reserve Bank continued with its plans to reduce the scale of monthly monetary stimulus.

USD/CHF touched a session high at 0.9080 at 20:00 GMT, or the highest point since January 23rd, after which the pair closed at 0.9064 on Friday, gaining 0.39% for the day. The weekly advance was 1.34%. Support was likely to be found at January 30th low, 0.8946, while resistance was to be encountered at January 23rd high, 0.9134.

On Friday the gauge of consumer confidence for the United States came in at a final reading of 81.2 in January, which outstripped experts’expectations pointing to a value of 81.0 and also the preliminary reading of 80.4, released on January 17th. The final value of the index of consumer sentiment stood at 82.5 in December.

This indicator is closely watched by analysts and traders, as it provides clues on the development of consumer spending, which on the other hand, is a key component of US Gross Domestic Product.

A separate report showed that consumers in the United States spent considerably on goods and services in December. During the holiday season personal spending rose 0.4% compared to November, outpacing preliminary estimates of a 0.2% increase. This appears to be the most significant gain since the beginning of 2012. The pace of personal spending in November has been revised up to a 0.6% gain from a 0.5% gain previously.

During the whole 2013 US consumers have increased their spending by 3.1% in comparison with the whole previous year, or the weakest annual increase since 2009. However, personal spending has demonstrated a steady pace of increase during the second half of 2013.

In addition, demand for the US dollar continued to be underpinned after the Federal Open Market Committee (FOMC) announced on Wednesday that it plans to reduce the pace of its monthly asset purchases to 65 billion USD from the current 75 billion USD. The Committee cited improvements in nation’s labor market and the pace of US economic growth, which has begun to accelerate in recent quarters. The central bank is to gradually withdraw from its unprecedented accommodative monetary policy and exit the easing program by the end of this year.

During the week ahead investors attention will be focused on the highly anticipated US non-farm payrolls report for January, as it may provide clues whether nations labor market continues to demonstrate resilience.

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

On Monday (February 3rd) SVME (Schweizerischer Verband für Materialwirtschaft und Einkauf) will announce its manufacturing Purchasing Managers Index for Switzerland in January.

The Institute for Supply Management (ISM) is to report on manufacturing activity in the United States also in January.

On Tuesday (February 4th) the Census Bureau will report on US factory orders for December, which are projected to advance 0.7%, after a 1.8% increase in November.

On Wednesday (February 5th) Automatic Data Processing Inc. (ADP) will present data regarding the change in US private sector employment in January.

At 15:00 GMT the Institute for Supply Management (ISM) will report on activity in the services sector in the United States in January.

On Thursday (February 6th) the State Secretariat for Economic Affairs (SECO) in Switzerland will announce the results of its survey on consumer climate in the country for January. This data is to be followed by a report on nations trade balance in December.

The United States will report on its trade balance in December, as the deficit probably expanded to 35.800 billion USD from a figure of 34.252 billion USD in the preceding month. A separate report will probably show that the number of initial jobless claims in the country declined to 335 000 in the week ended on February 1st, from 348 000 in the previous week.

On Friday (February 7th) Switzerland is expected to report on annualized retail sales in December.

In the United States official data will show the change in non-farm payrolls, accompanied by nations unemployment rate in January. US private sector probably added 180 000 job positions last month, while the rate of unemployment probably remained unchanged at 6.7%.