Forex Pros – Last week saw the U.S. dollar tumble to a new all-time low against the Swiss franc amid expectations that the Federal Reserve will continue to keep interest rates low for some time to come.
USD/CHF hit 0.8624 on Friday, the pair’s all-time low; the pair subsequently consolidated at 0.8650 by close of trade, tumbling 2.27% over the week.
The pair is likely to find short-term support at 0.8600 and resistance at 0.8759, last Thursday’s high.
In his first ever post-policy meeting press conference on Wednesday, Federal Reserve Chairman Ben Bernanke said that the central bank, which left interest rates unchanged, “will complete” its USD600 billion bond-buying program by the end of June but indicated that the Fed was in no rush to tighten monetary policy with the jobs market still in a “very, very deep hole.”
Elsewhere, on Thursday, the Commerce Department said U.S. economic growth slowed to a 1.8% annual rate in the first quarter, from 3.1% in the prior three months.
Meanwhile, the Swissie was boosted on Friday after Swiss National Bank President Philipp Hildebrand said price stability might be threatened by higher commodity prices, a weakening franc and the central bank’s expansionary policy.
“Should the Swiss franc weaken again rapidly, rising commodity prices could also have an impact in our country,” Hildebrand said. “Furthermore, the expansionary monetary policy carries long-term risks for price stability.”
Also Friday, the KOF Swiss Economic Institute said its leading indicator, a gauge that aims to predict the economy’s direction about six months ahead, climbed to 2.29 in April, compared with a revised 2.25 the previous month. Economists expected a decline to 2.20.
Looking ahead, in a week that will be shortened by a holiday in Switzerland, markets will be looking to Friday’s U.S. non-farm payrolls report to gauge the recovery in the strength of the jobs market.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, May 2
The U.S. Institute for Supply Management is to publish its manufacturing PMI, a leading indicator of economic health, while markets in Switzerland are to remain closed for the May Bank Holiday.
Meanwhile, Switzerland is to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The country is also to release an index of manufacturing activity, a leading indicator of economic health.
Tuesday, May 3
The U.S. is to release government data on factory orders, a leading indicator of production.
Wednesday, May 4
The U.S. is to publish data on non-farm payrolls compiled by payroll processing firm ADP, which leads government data by two days. Meanwhile, the U.S. Institute for Supply Management is to publish its non-manufacturing PMI. The country is also to publish government data on crude oil stockpiles.
Thursday, May 4
The U.S. is to publish its weekly report on initial jobless claims as well as preliminary data on labor costs and productivity. The country is also to release official data on natural gas inventories. Also Thursday, Fed chair Ben Bernanke is to speak at a public engagement, his comments will be closely watched for any clues to the future possible direction of monetary policy.
Friday, May 6
Switzerland is to publish official data on its unemployment rate. Meanwhile, the U.S. is to round up the week by publishing key government data on non-farm payrolls as well as data on the country’s unemployment rate and average earnings.
ForexPros.com
