EUR/CHF Weekly Fundamental Analysis February 6-10, 2012, Forecast

Economic Event: (GMT)

EUR/CHF Weekly Fundamental Analysis February 6-10, 2012, Forecast

Historical

Highest: 1.5193 CHF on 10 Oct 2009.

Average: 1.3271 CHF over this period.

Lowest: 1.026 CHF on 10 Aug 2011.

Rules:

Characteristics

Average broker spread: 3-5 pips 
Daily range average: 35-48 pips 

What moves:

• The interest rate differential between the European Bank(ECB) and the Swiss National Bank(SNB)
• Swiss and Euro zone fundamentals

Trading the EUR/CHF 

News from the Euro and Swiss zone. EUR/CHF is frequently chosen for carry trades which involves going long a high-yielding currency (EURO – 3.50%) against a low-yielding one (CHF – 1.50%). Traders earn daily interest fees when holding this pair long (rollover fees). 

Analysis and Recommendations:

The EUR/CHF closed the week 1.2082 slightly strong.   The Swiss National Bank reiterated all week that the Swiss Central bank will do all within its power to support the EUR/CHF at 1.20.

Official data showed on Thursday that the trade balance narrowed more-than-expected in December to CHF2.07 billion from CHF2.95 billion the previous month.

The data came after a report showing that Swiss retail sales rose far less-than-expected in December, adding 0.6% after a 1.8% rise the previous month and disappointing expectation for a 1.6% increase.

Manufacturing activity in Switzerland unexpectedly deteriorated in January, contracting for the fourth consecutive month. 

The euro went along on the rollercoaster ride on strong US employment data, the USD surged pushing all of its trading partners down, until the markets realized that the strong data meant little or no Fed intervention. The euro was able to regain some ground. 

Strength:

1) US- Jan Payroll gains show big upside surprise of 243k, about 100k more than expected, unemployment rate falls to 8.3%

2)  US- ISM services index rises to best since Feb ’11

3)  US-ISM manufacturing up 1 pt but touch less than expected

4) US -Jan vehicle sales at 14.1mm is best since clunker month in Aug ’09 and the most since May ’08 before that

5) US – savings rate rises to 4% from 3.5%

6) US -Initial Jobless Claims fall 12k

7) Germany -unemployed fall again, rate at 6.7%

8 ) UK- manufacturing and services PMI figures both rise

9) Eurozone- manufacturing and services PMI in line with initial

10) Portuguese bond yields fall from highs, Italian yields lower too with Spain flat

11)China – manufacturing PMI stays above 50, Taiwan and South Korea rise but remain below 50

12) India – manufacturing and services PMI both jump

Weakness:

1) US- Jan Consumer Confidence falls almost 4 pts to 61.1, well below expectations of 68 as labor market answers soften and those that plan to buy a home falls to lowest since Aug and those that plan to buy a car down at lowest since Oct ’10

2) US -CS home price index falls to lowest since Feb ’03

3) US -MBA said refi’s fell 3.6% and purchase apps were down 1.7%

4) Canada – Jan jobs report disappoints

5) China – PMI services index falls to 52.9 from 56, the 2nd lowest since Feb ’11

6) Taiwan -economy in a recession after Q4 contraction q/o/q

7) Greek- debt discussions for another week are hours away from wrapping up, becoming a nightmare

8 )Eurozone -Amount of LTRO funds from ECB continue to be redeposited with the ECB

Feb 07  09:00  Netherlands Eur 5.0bn Jul 2022 DSL

Feb 07  10:10  Greece  6M T-bill auction

Feb 07  10.30  UK  Auctions 1.75% 2017 conventional Gilt

Feb 07  15:30  UK  Details gilt auction on Feb 16

Feb 07  18:00  US  Auctions 3Y Notes

Feb 08  10:10  Sweden  Nominal bond auction

Feb 08  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Feb 08  10:30  Swiss  Bond auction

Feb 08  16:30  Italy   Details BOT auction on Feb 13

Feb 08  18:00  US  Auctions 10Y Notes

Feb 09  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 09  15:30  Sweden  Details I/L bond auction on Mar 23

Feb 09  16:00  US  Announces auctions of 30Y TIPS on Feb 16

Feb 09  16:30  Italy   Details BTP/CCTeu auction on Feb 14

Feb 09  18:00  Italy   Auctions 30Y Bonds

Feb 10  11:00  Belgium  OLO auction