Forex Market: USD/CHF daily trading forecast

Yesterday’s trade saw USD/CHF within the range of 0.9660-0.9724. The pair closed at 0.9665, losing 0.48% on a daily basis.

At 7:31 GMT today USD/CHF was down 0.05% for the day to trade at 0.9659. The pair touched a daily low at 0.9628.

Fundamentals

United States

Retail sales

Retail sales in the United States probably increased 0.3% in November on a monthly basis, according to the median forecast by experts. In October retail sales recorded another 0.3% surge, which neutralized the 0.3% decrease in September. The latter has been the first drop in eight months. Sales in non-store retailers marked the largest increase, or 1.9% in October, followed by sales of sporting goods, books and at music stores (up 1.2%), food services and drinking places (up 0.9%) and sales in health and personal care stores (a 0.7% increase). On the other hand, sales in electronics and appliance stores were 1.6% lower, while those in gasoline stations dropped 1.5%, according to the report by the US Census Bureau.

Annualized retail sales climbed 4.1% in October, or at the slowest rate since March, following a 4.4% gain in September.

The report on retail sales reflects the dollar value of merchandise sold within the retail trade by taking a sampling of companies, operating in the sector of selling physical end products to consumers. The retail sales report encompasses both fixed point-of-sale businesses and non-store retailers, such as mail catalogs and vending machines. The Census Bureau, which is a part of the Department of Commerce, surveys about 5 000 companies of all sizes, from huge retailers such as Wal-Mart to independent small family firms.

US core retail sales, or retail sales ex autos, probably rose 0.1% in November compared to a month ago, following a 0.3% gain in October. This indicator removes large ticket prices and historical seasonality of automobile sales.

The retail sales index is considered as a coincident indicator, thus, it reflects the current state of the economy. It is also considered a pre-inflationary indicator, which investors can use in order to reassess the probability of an interest rate hike or cut by the Federal Reserve Bank. In addition, this indicator provides key information regarding consumer spending trends. Consumer expenditures, on the other hand, account for almost two-thirds of the US Gross Domestic Product. Therefore, a larger-than-expected increase in sales would certainly boost the US dollar. The official report is due out at 13:30 GMT.

Initial, Continuing jobless claims

The number of people in the United States, who filed for unemployment assistance for the first time during the week ended on December 5th, probably decreased to 295 000 from 297 000 in the prior week. The 4-week moving average, an indicator lacking seasonal effects, was 299 000, marking an increase of 4 750 from the previous weeks revised average. The previous weeks average was revised up by 250 from 294 000 to 294 250.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims fell more than projected, this would have a bullish effect on the greenback.

The number of continuing jobless claims probably decreased to the seasonally adjusted 2 350 000 during the week ended on November 28th, from 2 362 000 in the previous week. The latter was an increase by 39 000 compared to the revised up number of claims, reported during the week ended on November 14th. This indicator represents the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.

The Department of Labor is to release the weekly report at 13:30 GMT.

Switzerland

SNB policy decision

The Swiss National Bank (SNB) will probably leave its benchmark interest rate (the three-month Swiss franc Libor) unchanged within the target range of 0.0-0.25% at the policy meeting today, according to the median forecast by experts. At its meeting on September 18th the central bank also kept the minimum exchange rate at CHF 1.20 per euro, while revising down its economic growth and inflation forecast for 2014.

According to extracts from banks most recent Monetary Policy press release: ”The economic outlook has deteriorated considerably. The Swiss franc is still high. With the three-month Libor close to zero, the minimum exchange rate remains the key instrument to avoid an undesirable tightening of monetary conditions. The SNB will therefore continue to enforce the minimum exchange rate with utmost determination. For this purpose, it is prepared to purchase foreign currency in unlimited quantities. If necessary, it will take further measures immediately.

The SNB’s conditional inflation forecast of September points to significantly lower inflationary pressure in the medium term. In the first quarter of 2015, the inflation forecast actually shows a slight increase in inflation, reflecting a base effect due to the rise in prices in the previous quarter. However, from mid-2015 onwards, inflation is set to be lower. This is mainly due to the deterioration in the global economic outlook and slower growth in Switzerland. For the current year, the inflation forecast of 0.1% remains unchanged. The new forecast for 2015 of 0.2% is 0.1 percentage points lower than at the last monetary policy assessment

At an annualised rate of -0.2%, second-quarter GDP growth in Switzerland was distinctly lower than forecast in June. Despite having expected a rate of around 2% in June, given the current data, the SNB now puts this year’s growth rate at only just below 1.5%. Production capacity will therefore remain underutilised for longer than previously assumed, and the recovery on the labour market is also likely to be delayed.”

In case the SNB maintaned its benchmark rate at the current all-time low level, as a result of a more dovish view on inflation and overall economic activity in the country, this would cause a bearish impact on the local currency.

The official policy decision is scheduled to be announced at 8:30 GMT.

Additionally, at the same hour the chairman of the governing board of the SNB, Thomas Jordan, is to take a statement.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.9683. In case USD/CHF manages to breach the first resistance level at 0.9706, it will probably continue up to test 0.9747. In case the second key resistance is broken, the pair will probably attempt to advance to 0.9770.

If USD/CHF manages to breach the first key support at 0.9642, it will probably continue to slide and test 0.9619. With this second key support broken, the movement to the downside will probably continue to 0.9578.

The mid-Pivot levels for today are as follows: M1 – 0.9599, M2 – 0.9631, M3 – 0.9663, M4 – 0.9695, M5 – 0.9727, M6 – 0.9759.

In weekly terms, the central pivot point is at 0.9733. The three key resistance levels are as follows: R1 – 0.9853, R2 – 0.9921, R3 – 1.0041. The three key support levels are: S1 – 0.9665, S2 – 0.9545, S3 – 0.9477.