EUR/CHF Forecast Jan. 16-20, 2012, Fundamental Analysis

EUR/CHF Forecast Jan. 16-20, 2012, Fundamental Analysis
EUR/CHF Forecast Jan. 16-20, 2012, Fundamental Analysis
The pair fluctuated heavily in the past week and the main focus was surely the SNB after Hildebrand’s unexpected resignation.

His resignation left the market pondering how strong the SNB would be and the commitment to fight the franc’s appreciation, despite assurances that the bank is ready and strong to fight the crisis. The fear though was highlighted after Finance Minister Eveline Widmer-Schlumpf said on Wednesday the process of finding a successor could take until May which is till now supporting franc gains as investors assess if the SNB is vulnerable to test its cap.

More volatility is expected for the franc this week as eyes are still on any movement or comments from the SNB as investors test their waters and their defense to their set cap against the euro and the currency’s appreciation.

Data is heavier on U.S. grounds with inflation and industrial data flowing our way. The sentiment has been generally improving over the U.S. economic state and outlook and more figures this week with help support that expectation, especially as they are expected with gains. We still see the volatility likely with Europe still the predominant focus and concern and steers the sentiment accordingly, we saw some signs of stability last week after successful bond auctions and commitment from leaders to move forward which was confirmed by the ECB yet we need more from Europe to ensure that this unwinding in here to stay and not just a temporary relapse in the sentiment, where if that is seen surely the downside pressure will be evident on the U.S. dollar.

The franc was generally strong last week with the dollar held at bay

The release of the data this week will be as follows:

Monday January 16:

The Swiss economy will start the week at 08:15 GMT with the Producer & Import Prices for December after the 0.8% drop recorded the previous month and 2.4% decline on the year,

Tuesday January 17:

The United States, the day will start at 13:30 with the January Empire Manufacturing index which is expected with improvement to 10.50 from 9.53.

Wednesday January 18:

The Swiss economy will release the Credit Suisse ZEW Expectations Survey for January, where the previous month it was at -72.0.

As for the United States a busy day starts at 13:30 GMT with the Producer Price Index for December where it is expected to ease on the month to 0.1% after 0.3% and on the year expected at 5.1% from 5.7%; excluding food and energy the index is expected steady at 0.1% and on the year to slow to 2.8% after 2.9%.

At 14:00 GMT the TIC flows for November are due after the total Net TIC Flows in October declined in October with total selling of $48.8 billion.

At 14:15 GMT the December Industrial Production index is expected with 0.5% rebound from the previous month’s 0.2% drop and capacity utilization to tick higher to 78.1% from 77.8%.

Thursday January 19:

The U.S. economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16, where they will be available at 13:30 GMT. At 14:45 GMT, Chicago purchasing manager is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.

The U.S. will start the data at 13:30 GMT with the Inflation Report. The CPI index is expected with 0.1% rise on the month after holding unchanged the previous month and on the year to slow to 3.1% after 3.4%. Excluding food and energy the index is expected with 0.1% rise on the month after 0.2% gain and on the year to hold at 2.2%.

December Housing Starts index is also due the same time and expected flat at 685,000 while Building Permits are expected with 0.7% drop to 675,000 from 681,000.

As for the Jobless Claims for the week ending in January 14 it is also due at 13:30 GMT as usual after last week they rose 24,000 to 399,000 last week.

As for the Philadelphia Fed Index for January the index is due 15:00 GMT and expected to improve slightly to 11.0 from 10.3.

Friday January 20:

The United States is set to end the week with the Existing Home Sales for the month of December at 13:00 GMT where they are expected to extend the gain with 5.2% to 4.65 million from 4.42 million.

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