EUR/CHF Weekly Forecast December 26-30, 2011, Fundamental Analysis

The EUR/CHF ended last week with slight gains yet generally trading was calm and in a tight range as the holiday spirit covers the pair and mainly expected also for this week.

We started from last week to see the thin holiday volume with the choppy trading evident as the eyes were on the ECB three year loans which flooded banks with 489 billion euros and the market still has a cautious reaction to it.

This week we are surly in the holiday mode and with thin volumes of trading any move might be violent and especially with the lack of major data.

The major event will be the Italian debt sale and only the leading indicators from Switzerland. In general we expect choppy, tight range and volatile trading in the last week of the year and investors might attempt to be hopeful and continue the upside correction yet likely will be limited as what awaits ahead remains gloomy and uncertain for the debt crisis and the global economy.

Other news from the euro area and the Swiss economy to affect the pair this week:

Monday December 26:

Markets closed for Christmas holiday.

Tuesday December 27:

No major news scheduled and the market movement will be thin on low volume and focused on the sentiment.

Wednesday December 28:

Switzerland will lease the KOF Swiss Leading Indicators for December at 10:30 GMT and expected to fall to 0.20 from 0.35. As for the euro area the eyes will be on Italy that will be preparing to auction new bonds.

Thursday December 29:

Germany is set to release the preliminary CPI estimate for December where the index is expected with 0.8% rise on the month from a flat previous and 2.2% on the year from 2.4%. In EU Harmonized terms it’s expected to rise also by 0.8% from a flat previous and on the year to ease to 2.4% from 2.8%.

The euro area will release the M3 Money Supply for November at 09:00 GMT which is expected to hold at 2.8% in the three months to November and on the year to fall slightly to 2.5% from 2.6%.

Friday December 30:

No major news scheduled and the market movement will be thin on low volume and focused on the sentiment.