Forex Market: USD/CHF daily trading forecast

Yesterday’s trade saw USD/CHF within the range of 0.9627-0.9710. The pair closed at 0.9677, gaining 0.18% on a daily basis.

At 7:50 GMT today USD/CHF was up 0.12% for the day to trade at 0.9688. The pair touched a daily high at 0.9699.

Fundamentals

United States

Producer Prices

United States’ annualized producer price inflation probably slowed down to 1.4% in November, according to the median estimate by experts, from 1.5% in October. If so, this would be the lowest producer inflation since March, when the corresponding index (PPI) climbed at an annualized pace of 1.4%. This index reflects the change in prices of over 8 000 products, sold by manufacturers during the respective period. The Producer Price Index (PPI) differs from the Consumer Price Index (CPI), which measures the change in prices from consumer’s perspective, due to subsidies, taxes and distribution costs of different types of manufacturers in the country. The simple logic behind this indicator is that if producers are forced to pay more for goods and services, they are more likely to pass these higher costs to the end consumer. Therefore, the PPI is considered as a leading indicator of consumer inflation. Lower-than-expected producer prices would usually have a bearish effect on the greenback.

Nation’s annualized core producer price inflation, which excludes prices of volatile categories such as food and energy, probably remained unchanged at 1.8% in November. This indicator is quite sensitive to changes in aggregate demand, thus, it can be used as a leading indicator for economy. However, because of its restrained scope, it is not suitable for future inflation forecasts. The Bureau of Labor Statistics is expected to report the official PPI performance at 13:30 GMT.

Michigan/Reuters Confidence Index – preliminary estimate

The monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States continued to improve in December. The preliminary reading of the corresponding index, which usually comes out two weeks ahead of the final data, probably rose to 89.5 during the current month from a final value of 88.8 in October. If so, this would be the highest index value since July 2007, when the gauge was reported at 90.4. The survey encompasses about 500 respondents throughout the country. The index is comprised by two major components, a gauge of current conditions and a gauge of expectations. The current conditions index is based on the answers to two standard questions, while the index of expectations is based on three standard questions. All five questions have an equal weight in determining the value of the overall index.

The sub-index of current economic conditions decreased marginally to a final reading of 102.7 from a preliminary 103.0 in November, after a month ago it stood at 98.3. The sub-index of consumer expectations came in at a reading of 79.9, down from a preliminary value of 80.6 in November, but improving from 79.6, registered in October.

In case the gauge of consumer sentiment showed a larger improvement than projected, this would boost demand for the greenback. The preliminary reading is due out at 14:55 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.9671. In case USD/CHF manages to breach the first resistance level at 0.9716, it will probably continue up to test 0.9754. In case the second key resistance is broken, the pair will probably attempt to advance to 0.9799.

If USD/CHF manages to breach the first key support at 0.9633, it will probably continue to slide and test 0.9588. With this second key support broken, the movement to the downside will probably continue to 0.9550.

The mid-Pivot levels for today are as follows: M1 – 0.9569, M2 – 0.9611, M3 – 0.9652, M4 – 0.9694, M5 – 0.9735, M6 – 0.9777.

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.