EUR/CHF Weekly Fundamental Analysis May 14-18, 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 May 14-18, 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

Weekly Analysis and Recommendations:

The EUR/CHF drifted downward at the end of the week to trade at 1.2008 as the euro continued to drop to new monthly and current year lows. Even with the SNB floor, it is difficult for the CHF to support the level. The euro has been falling all week while this pair traded in a tight channel between 1.2010 and 1.2020 oblivious to eco data and global sentiment. In Friday’s session the euro bears finally were able to push the euro down a bit more.

It is going to be a difficult week, if risk aversion continues the call of the week.

With political turmoil and disarray investors have moved from the euro and euro associated investments and assets. Problems in Greece, Spain and worries about the new face of the EU, have markets running for cover this week.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which cover the current week and are published by Sunday before the new week begins

Major Economic Events for the past week actual v. forecast

May 10

AUD

Employment Change

15.5K

-5.5K

44.0K

AUD

Unemployment Rate

4.9%

5.3%

5.2%

GBP

Interest Rate Decision

0.50%

0.50%

CAD

Trade Balance

0.4B

1.0B

0.3B

USD

Trade Balance

-51.8B

-50.0B

-45.4B

USD

Initial Jobless Claims

367K

369K

368K

USD

Fed Chairman Bernanke Speaks

May 11

CNY

Chinese CPI (YoY)

3.4%

3.3%

3.6%

CNY

Chinese CPI (MoM)

-0.1%

-0.2%

0.2%

Historical:

Highest: 1.5193 CHF on 10 Oct 2009.

Average: 1.3271 CHF over this period.

Lowest: 1.026 CHF on 10 Aug 2011.

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

May 14

07:00

EUR

Finnish CPI (YoY)

2.90%

08:15

CHF

PPI (MoM)

0.3%

08:30

EUR

Dutch Retail Sales (YoY)

0.90%

10:00

EUR

Industrial Production (MoM)

-0.2%

0.5%

May 15