Forexpros – The U.S. dollar dipped against the Swiss franc in subdued trade on Friday, trimming some of the week’s gains as sustained concerns over the debt crisis in the euro zone supported safe haven demand.
USD/CHF hit 0.9469 on Thursday, the pair’s highest since December 15; the pair subsequently consolidated at 0.9384 by close of trade on Friday, shedding 0.19% over the week.
The pair is likely to find support at 0.9266, the low of December 20 and resistance at 0.9477, the high of December 13.
Trading volumes remained low seeing as many traders closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing volatility.
Data showed Thursday that U.S. pending home sales rose far more-than-expected in November, surging 7.3% after a 10.3% increase the previous month.
Analysts had expected pending home sales to rise 1.7% in November.
In a separate report, market research group Kingsbury International said its Chicago purchasing managers’ index dipped to 62.5 in December from a reading of 62.6 in November, which was the highest since April.
The data came after the U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits in the week ending December 23 rose to 381,000, disappointing expectations for a rise to 370,000.
Despite, the increase claims have fallen below 400,000, a level historically associated with an improving labor market, in seven of the past eight weeks.
But market sentiment remained under pressure after Italy’s Treasury sold just over EUR7 billion of long-term debt maturing between 2014 and 2022, below the maximum target of EUR8.5 billion.
Following the auction, the yield on Italy’s 10-year bonds traded at 7.1%, above the critical 7% threshold widely seen as unsustainable in the long-term.
The sale was seen as the first test of European banks’ willingness to purchase long-term sovereign debt of distressed euro zone countries, following last week’s nearly EUR500 billion cash infusion by the European Central Bank.
The greenback rose to a nine-day high against the Swissie on Wednesday, after Italy’s Treasury sold EUR9 billion euros of six-month bills, at an average yield of 3.25%, down from 6.50% in a previous auction in November. The country also sold EUR1.73 of two-year zero coupons at 5%.
Meanwhile, data showed that Switzerland’s leading economic barometer declined significantly more-than-expected to 0.01 in December, falling to a new low for the second consecutive month.
In the week ahead trading volumes are expected to remain light. The U.S. is to release key reports manufacturing activity, jobless claims and non-farm employment change, while Switzerland is to produce data on consumer price inflation.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, January 2
Markets in the U.S. will be remaining closed for a national holiday.
Tuesday, January 3
Switzerland is to release a report on the purchasing managers’ index, a key indicator of economic health.
Later Tuesday, the U.S. is to publish data on manufacturing PMI. The Federal Reserve is also to release the minutes of its latest policy-setting meeting.
Wednesday, January 4
The U.S. is to publish government data on factory orders, a leading indicator of production.
Thursday, January 5
The Swiss National Bank is to release a report on foreign currency reserves.
Elsewhere, the U.S. is to publish industry data on non-farm employment change, a key indicator of consumer spending, followed by weekly government data on unemployment claims. The country is also to release a report by the Institute for Supply Management on non-manufacturing PMI as well as data on crude oil stockpiles.
Friday, January 6
Switzerland is to produce an official report on consumer price inflation, which accounts for a majority of overall inflation.
The U.S. is to round up the week with a government reports on non-farm employment change and the unemployment rate. The country is also to release government data on average hourly earnings, a key indicator of consumer inflation.
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