USD/CHF Forecast Dec. 22, 2011, Fundamental Analysis

On Wednesday trading, the franc weakened against the dollar despite the improvement in the sentiment as the pair did an upside correctional movement after it dropped from a high of 0.9546 recorded on Dec. 15. 

The market some improvement in the sentiment for the second day after the ECB offered 489 billion euros of three-year funds to 523 European banks, above estimtes of 310 billion euros, providing hopes the ECB would provide banks with the all the needed liquidity. 

On Tuesday, German business confidence unexpectedly advanced for the second month, where the business climate indicator surged to 107.2 in Dec. from 106.6 in November, while U.S., housing starts showed a rise to 685 thousands in Nov. from 627 thousands.

In Switzerland, the trade surplus widened to 3.00 billion francs in Nov. compared with the prior surplus of 2.15 billion francs. Exports, however, dropped 6.8% from the prior 0.9% rise while imports fell 7.7% from the 1.7% advance a month earlier.

Also, a Spanish bond selling witnessed a rise in demand and decline in yield, where the main focus in the market is still on the latest developments in the euro area. 

On Thursday, the Swiss economy has no releases while in the U.S. the main focus will be on the main highlight of the week which is GDP annualized for the third quarter (third reading), which is predicted to remain unrevised at 2.0%, where it will be available at 13:30 GMT, while personal consumption will also linger at 2.3%.

Moreover, initial jobless claims for the week ending Dec. 9 and continuing claims for the week ending Dec. 18 will also be available at 13:30 GMT. Thereafter, at 14:55 GMT, University of Michigan confidence will show a rise to 68.0 in Dec. from the prior 67.7.

The pair is expected to be affected by the data due to its high relevance, yet it may also follow the general trend in the market which is focusing on the latest developments in the euro region.