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

USD/CHF Forecast Jan. 16-20, 2012, Fundamental Analysis
USD/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 euro area will start the data at 10:00 GMT with the December inflation figures, where the CPI index is expected with 0.4% rise on the month after 0.1% gain and on the year to confirm the flash estimate and fall to 2.8% from 3.0% while core CPI inflation to hold at 1.6%.

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.

The euro area Construction Output for November is due at 10:00 GMT after it dropped 1.4% in October and on the year was down 2.8%.

Thursday January 19:

The ECB will release the monthly report for January at 09:00 GMT. At the same time we have the Current Account for November which is likely to improve from the previous recorded 7.5 billion euro deficit in October after the reported huge trade surplus on the back of exports gains.

Friday January 20:

Both economies do not have fundamentals queued for release and the movement will be based on the market sentiment.

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