Swiss franc Fundamental Analysis, February 25, 2015 – Forecast – USDCHF & EURCHF

Analysis and Recommendations:

The USD/CHF gave back a bit of yesterday’s gains as the US dollar continued to gather momentum ahead of Janet Yellen. The EUR/CHF is holding at 1.0755 down 10 points as the Greeks continue to stress out the Eurozone.  Following the decision to lift the €1.20 cap last month, the franc shot up by 40 per cent against the euro.  The franc also rose 30 per cent against the dollar and 15 per cent against sterling. In short, the Swiss can now get more for their money.

Switzerland has long had an outsize impact on its neighbors. Bank secrecy was for decades a magnet for European tax evasion, making the Alpine country the world’s biggest offshore center and one of the world’s richest countries. More recently, Switzerland’s robust economy, rock-bottom unemployment and strong currency have pulled in workers and capital looking to escape the distress of the eurozone and feed off Swiss prosperity.

About 300,000 workers commute each day from France, Germany and Italy to work in Switzerland, up a third in five years. In turn, Swiss shoppers have crossed into the eurozone looking for bargains. The result is a booming borderland worth up to 300 billion francs ($319.68 billion) annually, or roughly the size of Indiana’s economy, according to UBS estimates.

Today’s watch: As traders turn their attention to Janet Yellen’s testimony on Tuesday and Wednesday it is hard to forecast the US dollar volatility until she begins her presentation which is not until late in the trading session. The US dollar is continuously rising ahead of the event. Traders can expect Yellen to keep her hawkish attitude while lawmakers press her for some commitment. Also the EU Ministers will not give a final nod to Greece’s reforms until later tonight but markets have turned off on Greece so the euro can be expected to remain in the lower 1.13 price range and the greenback should hold near the 94.70 level over the next trading period. The pound will react to the greenback although it is trading extremely high is will most likely dipped to the bottom of the 1.54 range.  The CAD will remain weak and hold at the 1.26 level as crude oil is expected to remain in the red. Natural gas is expected to recover earlier declines as traders booked profits, but weather forecasts continue to show storms and cold.  Otherwise commodities will remain quiet until tomorrow when China returns from holidays.

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.

Today’s economic releases actual vs. forecast:

 

Upcoming Economic Events that you should be monitoring:

Wednesday, February 25, 2015

Government Bond Auctions

Date Time Country

Feb 24 11:10 Italy Eur 2.5-3bn Feb 2017 CTZ, plus Eur 0.5-1bn Sep 2026 BTPei

Feb 24 19:00 US 26bn 2-yr Notes

Feb 25 11:03 Sweden Sek 1.75bn 4.25% Mar 2019 & Sek 1.75bn 3.5% Jun 2022 bonds

Feb 25 11:30 Germany Eur 4bn Apr 2020 Bobl

Feb 25 19:00 US 13bn 2-yr FRNs, plus 35bn 5-yr Notes

Feb 26 11:10 Italy Auctions BTPs

Feb 26 19:00 US 29bn 7-yr Notes

Mar 03 11:15 Austria Holds RAGB bond sale

Mar 03 11:30 UK Auctions conventional Gilt

Mar 04 16:30 Sweden Details bond sale on 11 Mar

Mar 05 10:30 Spain Auctions Bonos

Mar 05 11:10 France Auctions OATs

Mar 05 17:00 US Announces 3/10 year Notes, plus 30-yr Bond