Forex Pros – Last week saw the U.S. dollar drop to a fresh record low against the Swiss franc as concern over U.S. debt, as well as the view that the Federal Reserve will lag other central banks in raising interest rates weighed on the greenback.
USD/CHF hit 0.8778 on Thursday, the pair’s all-time low; the pair subsequently consolidated at 0.8857 by close of trade on Friday, tumbling 0.76% over the week.
The pair is likely to find support at 0.8750 and resistance at 0.9010, the high of April 20.
Standard & Poor’s warned the U.S. government last week that it risks losing its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt. S&P maintained its top rating on U.S. long-term debt while lowering the outlook to negative for the first time.
Meanwhile, the Swiss franc was bolstered by speculation that the Swiss National Bank may follow the European Central Bank in raising interest rates in the coming months after the SNB raised its 2011 growth outlook this month to around 2.0% from around 1.5%.
The SNB had been expected to raise rates for the first time since the onset of the global financial crisis in September although some analysts have now brought forward expectations for a rate move by June after stronger-than-expected March inflation data.
Looking ahead, in a week that will be shortened by holidays in many places, the highlight will be on Wednesday, when Fed Chairman Ben Bernanke holds a press conference after the bank’s rate setting meeting, the first ever regularly scheduled briefing by a Fed chief in the U.S. central bank’s 97-year history. Meanwhile, the Chairman of the SNB is to speak on Friday.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, April 25
Markets in Switzerland, the euro zone, the U.K., Australia and New Zealand will all be closed for the Easter Monday holiday.
Meanwhile, the U.S. is to publish government data on new home sales, a leading indicator of economic health.
Tuesday, April 26
Switzerland is to publish official data on its trade balance, the difference in value between imported and exported goods and services, as well as an index of consumer-based economic indicators complied by UBS Bank.
Also Tuesday, the U.S. is to publish reports on house price inflation and consumer confidence, as well as official data on manufacturing activity in Richmond.
Wednesday, April 26
The U.S. is to publish official data on durable goods orders, a leading indicator of production and crude oil inventories. Also Wednesday, the Federal Reserve is to announce its federal funds rate. The announcement is to be followed by the first ever regularly scheduled briefing by a Fed chief in the U.S. central bank’s 97-year history.
Thursday, April 27
The U.S. is to publish advance data on first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health. The country is also to publish government data on initial jobless claims and a report on pending home sales.
Friday, April 29
Switzerland is to publish the results of an economic index, compiled by the KOF Economic Research Agency, designed to predict the future direction of the economy. Also Friday, SNB Chairman Philipp Hildebrand is to speak in Berne.
The U.S. is to round up the week by releasing a flurry of data, with a government report on personal spending, personal income and personal consumption expenditures. The U.S. is also to publish a report on manufacturing activity in the in the Chicago area, while the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.
Later in the day, Fed Chairman Ben Bernanke is to speak at a public engagement. His comments will be closely watched for any clues to the possible future direction of monetary policy.
ForexPros.com
