USD/CHF Fundamental Analysis January 26, 2015 – Forecast

Analysis and Recommendations:

The USD/CHF gained 71 points to trade at 0.8782 as the US dollar soared to an all-time high after the euro dropped to new lows. After the introduction of the massive stimulus program the Swiss franc remained stable but the crosses went crazy. There has been some speculation that the SNB decided to end its franc cap ahead of the ECB move, fearing that a forthcoming bond-buying program, known as quantitative easing, could weaken the euro and force the SNB to buy more of the common currency to maintain the cap.

The ECB move follows quantitative easing programs put into place by the U.S. Federal Reserve, the Bank of England and Bank of Japan to reduce long-term interest rates and boost economies. The Swiss currency soared as much as 41 percent against the euro following the SNB’s abrupt change of course on Jan. 15, and the implications are playing out across Europe for Polish mortgage holders to French municipalities.

Switzerland would have had to spend more than 100 billion this month alone if it had continued efforts to hold down the value of its currency, a senior central bank official said Thursday. In a shock move a week ago, the Swiss National Bank scrapped a three-year-effort to keep down the value of the franc, sending the Swiss currency soaring by as much as 30 percent.

The soaring franc wreaked havoc on global markets and bankrupted several foreign exchange traders. But the central bank has ardently defended the move, insisting its efforts to enforce the ceiling, including purchasing massive amounts of foreign currency, were no longer sustainable.

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:

Monday, January 26^th

Government Bond Auctions

Date Time        Country             Auction

Jan 26               Germany           Eur 1.5bn 12M (Jan 2016) Bubills

Jan 26               Italy                  Announces details of BTP/CCTeu on 29 Jan

Jan 27              Holland                         Eur 1-2bn 2.75% Jan 2047 DSL (re-opening)

Jan 27               Spain                3 & 9M T-bill auction

Jan 27               Italy                  Auctions CTZ/BTPei

Jan 27               US                    Auctions 2-yr FRN, plus 2-yr Notes