USD/CHF Forecast Dec. 26-30, 2011, Fundamental Analysis

In the week ended Dec. 23, the USD/CHF showed a slight decline on improvement in data from the U.S. as well as the latest developments in the euro zone which caused investors to become long on the pound and high-yielding currencies at the expense of refuges.

The most recent data from the U.S. has been showing remarkable improvement. Last week, initial jobless claims for the week ended Dec. 17 to 364,000, the lowest in 3 and 1/2 months, from 368,000 a week before. University of Michigan confidence showed a rise to 69.9 in December from the prior 67.7.

In Switzerland, there have been talks last week about further measures to curb the franc’s advance as a panel from the government and the central bank discussed measures such as capital controls and negative interest rates and even restrictions, including a possible ban, on foreigners buying Swiss real estate to halt the franc’s rally which negatively affected prices and exporters.

However, the main focus remained on the latest developments from the euro area. The main actions taken in addition to news released last week caused an improvement in the sentiment. German business confidence rose for the second month in Dec., a Spanish bond selling witnessed high demand and low yield, European finance minister agreed to provide loans to IMF to fight debt crisis and the ECB offered European banks higher-than-estimated three-year funds.

This week, due to Christmas holidays there will be mainly few data from Switzerland and U.S. where the trading volume is expected to be very low.

The release of the data this week will be as follows:

Monday Dec. 26:

Both economies do not have fundamentals where the market will be closed due to holidays.

Tuesday Dec. 27:

As of 07:00 GMT, the Swiss economy will release UBS consumption Indicator for the month of Nov., yet the release is expected to have slight impact on the pair’s movements.

The U.S., on the other hand, will release S&P/caseShiller for the month of Oct., due at 14:00 GMT, which is predicted to record -0.20% from the prior -0.50%, followed by consumer confidence, available At 15:00 GMT, where analysts forecasts a soar to 58.5 in Dec. from 56.0 a month earlier.

Wednesday Dec. 28:

KoF Swiss leading indicator which is estimated to retreat to 0.20 in Dec. from the preceding 0.35 will be available at 10:30 GMT, while the U.S. lacks fundamentals.

Thursday Dec. 29:

The U.S. economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16 at 13:30 GMT. At 14:45 GMT, Chicago purchasing manager is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.

Friday Dec. 30:

The week ends with the release of no data from both economies and therefore the pair is predicted to follow the general sentiment in the market.