USD/CHF Forecast Dec. 13, 2011, Fundamental Analysis

The USD/CHF moved to the upside with the start of the week as the dollar gained grounds on the risk off sentiment in the market that powered the pair to the upside ahead of the rate decisions from both the Feds and the SNB.

The volatility remains high for the franc with investors avoiding any risky positions ahead of the SNB decision on fear of a drastic new move to weaken the franc. The currency also remained weak with the risk aversion supporting the dollar as investors saw the EU summit did nothing to end the crisis and Moody’s warning for downgrades intensified the jitters.

Tuesday will be more volatile for the pair and trading is likely to remain biased to the upside ahead of the FOMC decision where the feds are likely to keep their policy unchanged and with the rates to be held at the record low range near zero. Nevertheless, any signal from the Feds that they are ready to take new decisions to support the economy or even QE that might support the sentiment and accordingly weaken the dollar accordingly yet overall the bias for the pair remains to the upside.

The United States will join the session at 13:30 GMT with the retail sales index for November, where the advance retail sales index could have expanded by 0.6% from 0.5%, while the retail sales less Autos index could have advanced by 0.5% from 0.6%.

At 15:00 GMT the United States will provide the business inventories index for October, which could have improved 0.4% from the previous steady reading.

At 19:15 GMT the Federal Open Market Committee (FOMC) will announce the rate decision (DEC 13), with expectations the Federal Bank could have left rates unchanged at 0.25%.