USD/CHF Weekly Fundamental Analysis for July 25– 29, 2011

The USD/CHF did a rebound in the week that ended July 22 after two weeks of drop as concerns regarding a possible default to the world’s largest economy eased after the introduction of a new plan Democratic and Republican Senators which boosted hopes that debt woes would be resolved.

Also, the ease in debt crisis after European leaders agreed to giveGreecea second bailout in addition to other measures to prevent the spread of contagion to other highly indebted nations in the region lowered haven demand on the franc which has been the most favorable refuge amid the European debt crisis.

With regard fundamentals, the Franc was adversely affected by the grim trade report which showed that trade surplus narrowed to 1.74 billion francs in June compared with the prior surplus of 3.25 billion francs.

Johann Schneider-Ammann, the Swiss Economy Minister, said the franc’s appreciation against the euro is “alarming.” Thus, an intervention by the SNB may be expected if the franc strengthened further.

In theU.S., housing data showed improvement but initial jobless claims rose, yet the dollar was much affected by debt talks.

This week, the spotlight will be on other housing data from theUnited Statessuch as new home sales and pending home sales, where strong attention will be given to 2q annualized GDP as it is expected to retreat.

The pace of growth is expected to show a slowdown in theUSeconomy as seen by second quarter data, yet it is largely due to the slowdown in global economies. The data is expected to have a remarkable impact on the pair, especially if it came higher or lower than anticipations.

On the other hand, the Swiss economy will release few and data of low relevance this week.

Monday July 25:

Both economies lack fundamentals which suggest that there would be calm trading on the pair that is expected to follow the general trend in market as it will not able to get direction from data.

Tuesday July 26:

As of 06:00 GMT, the Swiss economy will release UBS consumption Indicator for the month of June, yet the release is expected to have slight impact on the pair’s movements. In theU.S., the main focus will be housing data starting with S&P/caseShiller, due at 13:00 GMT, followed by new home sales due at 14:00 GMT, where they will provide evidence about the status of the housing market. At 14:00 GMT, consumer confidence is expected to drop to 57.9 in July from 58.5.

Wednesday July 27:

KoF Swiss leading indicator which is estimated to retreat to 2.10 in July from the preceding 2.29 will be available at 09:30 GMT. Thereafter, eyes will be on MBA mortgage applications for July 22 at 11:00 GMT followed by durable goods orders report for June which is expected to show a 0.3% rise in June from the prior 1.9% advance. Finally, at 18:00 GMT, Fed’s Beige book will be out.

Thursday July 28:

While the Swiss economy lacks fundamentals, theU.S.economy will release initial jobless claims for the week ending July 23 and continuing claims for the week ending July 16 will be available at 12:30 GMT. At 14:00 GMT, pending home sales report is expected to show 2.0% drop in June relative to 8.2% rise recorded in May.

Friday July 29:

The week ends with the release of important data from the U.S. as 2q annualized GDP, due at 12:30 GMT, will show an ease to 1.7% from 1.9% in the first quarter, according to median forecasts.UniversityofMichiganconfidence will be available at 13:55 GMT with projections referring to an incline to 64.0 in July from the prior 63.8.

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