USD/CHF Forecast Dec. 16, 2011, Fundamental Analysis

USD/CHF Forecast Dec. 16, 2011, Fundamental Analysis
USD/CHF Forecast Dec. 16, 2011, Fundamental Analysis
On Thursday trading, the pair showed a significant drop, halting three days of rally after the Swiss National Bank (SNB) refused calls from exporters to raise the franc’s cap or push interest rate to negative.

Investors came long on the franc as they felt the SNB is not ready to intervene again amid the unknown fate for the debt crisis which may trigger demand on the franc as a safe haven.

Thus, perhaps policy makers will wait till seeing the latest developments in the euro zone, noting that the euro area nations are Switzerland’s main trading partners.

The SNB still believes that “the franc is still high and should continue to weaken over time,” leaving the door opened for further future interventions if needed, especially as the latest data from the Swiss economy referred to a slowdown in the growth pace.

Data released directly before the rate decision on Thursday showed that industrial production for the third quarter fell 1.4% from the revised 2.9% advance.

On the other hand, data from the United States gave some positivity to the sentiment. Continuing claims for the week ended December 03, came in lower than expected at 3603 thousand compared to the prior revised estimate of 3599 thousand and median estimates of 3637 thousand.

Also, empire manufacturing index showed advance and current account deficit narrowed.

On Friday, the week ends with the release of KOF Institute Dec. economic forecast at 10:30 GMT, while the U.S., at 13:30 GMT, will release CPI which is expected to linger at 3.5% in the year ending Nov., where the reading excluding food & energy is predicted to steady at 2.1%.

The data may have an impact on the pair’s movements, yet the pair may be more affected by the general sentiment which has been lately tracking the latest developments in the euro region.

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