EUR/CHF Weekly Fundamental Analysis March 26-30, 2012, Forecast

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Updated: Jan 1, 2011, 00:00 GMT+00:00

Introduction: News from the Euro and Swiss zone. EUR/CHF is frequently chosen for carry trades which involves going long a high-yielding currency (EURO -

EUR/CHF Weekly Fundamental Analysis March 26-30, 2012, Forecast

Introduction: 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).

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

Analysis and Recommendations:

The EUR/CHF closed the week down trading at 1.205; it was a steady fall all week dropping a bit each day at the close, 120.64, 1.2063, 1.2058, 1.2057 till it ended the week at 1.2050. This gives a clear picture of the euro’s weakness this week, the fact that it was trading higher against the dollar and maintaining a level over 1.32 shows a potential for a great fall. There was little supportive information for the Franc this week, except an export report showing that Swiss Watch exportation had soared.

This week begins the end of the month reporting cycle, highlighted by fourth quarter GDP data is due in the US. British GDP figures are also due, as well as current account numbers

On Monday, the US pending home sales index for February is set for release. Economists are expecting the date to show a 1% in sales for the month.

Monday also brings a speech from US Federal Reserve chairman Ben Bernanke to the National Association for Business Economics economic policy conference.

The Dallas Federal Reserve manufacturing survey is also due.

In the United Kingdom, nationwide housing prices data for February is expected.

Tuesday brings consumer confidence data for March in the US, as well as the Standard & Poors-Case Shiller home price index for January. Analysts are tipping confidence to have fallen by 0.3 points to 70.5 in March.

The Richmond Federal Reserve manufacturing index for March will also be released.

In the UK, third quarter GDP data is due. Current account figures for the fourth quarter are also on tap, along with total business investment data for the same period. Wrapping up a busy day, the March CBI distributive trades survey is awaited.

Wednesday sees the release of US durable goods orders data for February. Orders are expected to have risen 2.5 per cent in the month. Also the weekly Energy Information Administration petroleum status report is due.

Elsewhere, European Monetary Union money supply data for February is due.

Thursday brings highly anticipated US GDP data for the fourth quarter. Economists are predicting the figures will show the US economy grew around 3 per cent during the period.

Real personal consumption expenditures and gross domestic purchases price index for the quarter will also be released.

Also weekly US jobless claims figure are due.

In the UK, Gfk consumer confidence for March will be released, alongside consumer credit data for February.

Index of services figures for the three months to February is awaited, along with mortgage approvals data for the month. M4 Money Supply for February is also on tap.

US personal income and outlays data for February is awaited on Friday, as well as consumer sentiment figures. Economists are tipping spending to have lifted 0.6 per cent in the period, while income is expected to have grown 0.4 per cent.

The Chicago purchasing managers index for March is also on tap, alongside the Michigan Consumer Sentiment Index for the month.

The European Banking Authority is expected to release a consultation paper on reporting large exposures.

Last week’s highlights from around the globe:

The good:

Initial Jobless Claims fall to 348k, the lowest since Mar ’08 a drop of 5000 under forecast.

Multifamily housing starts jump again in Feb and permits rise to the most since Oct ’08.

Greek CDS payments clear smoothly. Greek Default date passes.

Portuguese 10 yr bond yield falls 108 bps in spite of concerns with it post Greece.

French business confidence rises 3 pts to a 4 month high

The not so bad:

China slowdown concerns grow.

HSBC preliminary manufacturers fall to 48.1 from 49.6, 5th month below 50.

More cities report home price decreases and fewer report home price increases.

BHP and Rio express reservations over pace of Chinese growth.

Official at China Assoc of Auto Mfr’s says auto sales likely to miss their estimates in 2012.

China raises gasoline and diesel prices.

Spanish and Italian 10 yr yields rise almost 20 bps on the week.

German and French manufacturers PMI fall back below 50.

Euro zone manufacturers and services composite index unexpectedly falls to 48.7 from 49.3.

UK retail sales below estimates and consumer confidence falls.

Feb US New Home Sales unexpectedly drop to 313k, a still anemic level and months’ supply up a touch to 5.8 from 5.7.

Existing Home Sales month’s supply rises to 6.4 from 6.0. Feb sales light but Jan revised up.

NAHB home builder survey unchanged at 28 vs. estimate of 30.

Single family housing starts flat, seeing no weather induced improvement.

Historical

Highest: 1.5193 CHF on 10 Oct 2009.

Average: 1.3271 CHF over this period.

Lowest: 1.026 CHF on 10 Aug 2011.

Economic Highlights of the coming week that affect the Euro, the USD and the Franc

Mar. 26