Forex Market: EUR/CHF trading forecast for Monday

Friday’s trade saw EUR/CHF within the range of 1.2044-1.2080. The pair closed at 1.2061, gaining 0.02% on a daily basis, while losing 0.01% for the whole week.

Fundamentals

Euro zone

Manufacturing data

Spanish Manufacturing Purchasing Managers Index (PMI) probably showed a slight improvement in October, coming in at a reading of 52.9 from 52.6 in September. If so, this would be the highest index level since July, when the PMI stood at 53.9. Values above the key level of 50.0 are indicative of optimism (increasing activity) and vice versa. The official reading is to be published at 8:13 GMT on Monday.

Activity in Italys sector of manufacturing was probably unchanged in October, with the corresponding PMI remaining steady at 50.7, as expected by experts. In August the PMI plunged to 49.8, which has been the lowest reading since June 2013. Markit Economics is expected to release the official data at 8:45 GMT.

Frances final manufacturing PMI probably remained in the zone of contraction during October, while confirming the preliminary PMI reading of 47.3, which was reported on October 23rd. If confirmed, this would be the lowest PMI reading since August, when it was reported at 46.9. The official PMI is due out at 8:50 GMT.

The final reading of German manufacturing PMI probably confirmed the preliminary value for October, with the index coming in at 51.8. In September the final PMI slipped to 49.9, a level unseen since June 2013, when the final index value was at 48.6. Markit will release the official reading at 8:55 GMT.

The final manufacturing PMI in the Euro zone probably also confirmed the preliminary value in October, with the index remaining at 50.7. The PMI reflects the performance of the manufacturing sector in the Euro area and is based on a survey of 3 000 manufacturing companies. National data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. These member states together account for almost 90% of Euro zones manufacturing activity. The Manufacturing Purchasing Managers Index is comprised by five individual indexes with the following weights: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stock of Items Purchased (10%), as the Delivery Times index is inverted, so that it moves in a comparable direction.

In case the final PMI readings exceeded expectations, the common currency would receive a boost. The official manufacturing data is scheduled to be released at 9:00 GMT.

Switzerland

Activity in Switzerland’s manufacturing sector probably expanded in October. The SVME Manufacturing Purchasing Managers Index (PMI) probably climbed to a reading of 51.4 last month, according to the median forecast by experts, from 50.4 in September. The latter has been the lowest index reading since April 2013, when the PMI was reported at 50.2. This indicator provides clues over growth of production in the country.

The Manufacturing Purchasing Managers Index is based on five major components with the following weights: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stock of Items Purchased (10%). The PMI is derived from a monthly survey, where participants can either respond with “better”, “same”, or “worse” to the questions about the industry, in which they operate. The resulting PMI value is measured on a scale from 0 to 100. If the index shows a value of 100.0, this means that 100% of the respondents reported an improvement in conditions. If the index shows a value of 0, this means that 100% or the respondents reported a deterioration in conditions. If 100% of the respondents saw no change in conditions, the index will show a reading of 50.0. Therefore, values above 50.0 are indicative of optimism (expansion in the sector). Higher-than-expected PMI readings would support demand for the franc. The SVME (Schweizerischer Verband für Materialwirtschaft und Einkauf) in cooperation with Credit Suisse will release the official data at 8:30 GMT on Monday.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2062. In case EUR/CHF manages to breach the first resistance level at 1.2079, it will probably continue up to test 1.2098. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2115.

If EUR/CHF manages to breach the first key support at 1.2043, it will probably continue to slide and test 1.2026. With this second key support broken, the movement to the downside will probably continue to 1.2007.

The mid-Pivot levels for Monday are as follows: M1 – 1.2017, M2 – 1.2035, M3 – 1.2053, M4 – 1.2071, M5 – 1.2089, M6 – 1.2107.

In weekly terms, the central pivot point is at 1.2064. The three key resistance levels are as follows: R1 – 1.2089, R2 – 1.2118, R3 – 1.2143. The three key support levels are: S1 – 1.2035, S2 – 1.2010, S3 – 1.2000.