EUR/CHF Weekly Fundamental Analysis April 2-6, 2012, Forecast

By FXEmpire.com

Introduction: The interest rate differential between the European Bank (ECB) and the Swiss National Bank (SNB)

• Swiss and Euro zone fundamentals

News from the Euro and Swiss zone. EUR/CHF is frequently chosen for carry trades which involves going long a high-yielding currency (EURO – 3.50%) against a low-yielding one (CHF – 1.50%). Traders earn daily interest fees when holding this pair long (rollover fees).

Analysis and Recommendations:

The EUR/CHF ended the month trading at 1.2040 with the euro falling closer and closer to the 1.20 level that the SNB says they will support the currency at that point. The euro traded as high as 1.2070 this week and ended the week close to the low of 1.2036

The euro should have picked up strength on Friday as it is quite high against the USD, but did nothing here. That tells us that we need to take a good look in what is actually supporting the euro at the moment. On Friday EU Finance Ministers agreed to bump up the total emergency funding to about 1 trillion euros, which is estimated at more than enough to cover the upcoming financial problems throughout the region.

There was very little in supportive data out of Switzerland, so again one might ask the question, is the value of the euro overstated.

Historical

Highest: 1.5193 CHF on 10 Oct 2009.

Average: 1.3271 CHF over this period.

Lowest: 1.026 CHF on 10 Aug 2011.

Economic Reports March 25-30, 2012 that affect the Eurozone actual v. forecast

EUR	German Business Expectations	102.7	102.6	102.4
EUR	German Current Assessment	117.4	117.0	117.4
EUR	German Ifo Business Climate Index	109.8	109.7	109.7
EUR	ECB President Draghi Speaks
EUR	GfK German Consumer Climate	5.9	6.2	6.0
GBP	CBI Distributive Trades Survey	0	-4	-2
GBP	BoE Gov King Speaks
EUR	French GDP (QoQ)	0.2%	0.2%	0.2%
GBP	GDP (QoQ)	-0.3%	-0.2%	-0.2%
GBP	Current Account	-8.5B	-8.4B	-10.5B
GBP	Business Investment (QoQ)	-3.3%	-5.4%	-5.6%
EUR	German CPI (MoM)	0.3%	0.3%	0.7%
GBP	Nationwide HPI (MoM)	-1.0%	0.2%	0.4%
EUR	German Unemployment Change	-18K	-10K	-3K
EUR	German Unemployment Rate	6.7%	6.8%	6.8%
EUR	Italian 10-Year BTP Auction	5.24%	5.50%
EUR	French Consumer Spending (MoM)	3.0%	0.2%	-0.4%
CHF	KOF Leading Indicators	0.08	0.08	-0.11
EUR	CPI (YoY)	2.6%	2.5%	2.7

Last week’s market highlights

The Good Stuff

• Eurozone Finance Ministers finalizes the temporary combination of the EFSF and ESM. Italy and Spain get to contribute to their own bailout fund if needed
• German unemployment falls more than expected and rate falls to lowest since reunification
• German IFO business confidence up slightly to the highest since July
• Italian business confidence up slightly from lowest since Dec ’09 and consumer confidence rises to 8 month high
• Consumer confidence rises a touch to best since Feb ’11
• Personal Spending in Feb rises .8% m/o/m, above estimates of up .6%
• UK said purchase apps rose 3.3% to a 10 week high.
• Crude finally drops but not enough

The Disappointing

• Inflation expectations in both the Michigan (3.9%) and Conference Board (6.3%)confidence figures rise to the highest since May,
• Chicago, Richmond, Dallas and KC manufacturing survey’s all fall more than expected in Mar from Feb
• Real income falls in Feb by .1%, savings rate drops to 3.7%, the lowest since Aug ’09
• Initial Jobless Claims 4 week avg 365k after benchmark revisions vs 355k prior
• Feb Durable Goods orders grow less than expected after Jan’s weakness
• UK said refinances fell 4.6% to lowest since early Dec
• Home price index falls to cheapest since Jan ’03
• Pending Home Sales in Feb unexpectedly falls .5% but from most since Apr ’10
• German retail sales in Feb fall for 4th month in past 5
• Shanghai index closes down for the 3rd straight week due to continued concerns with economic growth
• Bernanke Feds will do more, possible monetary easing
• Gasoline prices rise another .035 on the week to $3.93.

Economic Highlights of the coming week that affect the Euro, the USD and the Franc.

Apr. 02	08:15	CHF	Retail Sales (YoY)	-14.8B
08:30	CHF	SVME PMI
08:50	EUR	French Manufacturing PMI
08:55	EUR	German Manufacturing PMI
09:00	EUR	Manufacturing PMI
10:00	EUR	Unemployment Rate
15:00	USD	ISM Manufacturing Index
Apr. 03	10:00	EUR	GDP (QoQ)
19:00	USD	FOMC Meeting Minutes
Apr. 04	10:00	EUR	Retail Sales (MoM)
11:00	EUR	German Factory Orders (MoM)
12:45	EUR	Interest Rate Decision
13:15	USD	ADP Nonfarm Employment Change
13:30	EUR	ECB Press Conference
15:00	USD	ISM Non-Manufacturing Index
Apr. 05	08:15	CHF	CPI (MoM)
13:30	USD	Initial Jobless Claims
13:30	USD	Continuing Jobless Claims
Apr. 06	13:30	USD	Average Hourly Earnings (MoM)
13:30	USD	Nonfarm Payrolls
13:30	USD	Unemployment Rate
13:30	USD	Private Nonfarm Payrolls

Summary of this week’s highlights for the European Markets

In the United Kingdom, the March purchasing manager index for manufacturing is on tap.

The same release is due in Europe for the European Monetary Union.

EU unemployment rate data for February will also be released.

PMI construction data for March is awaited in the UK, along with the BRC shop price index for the month.

EU producer price index data is also due.

In the UK, the March purchasing manager index for services is expected to be released.

The European Central Bank will wrap up a busy day with a meeting to decide on the current level of interest rates in the currency bloc.

Industrial production data for February is due in the UK, along with manufacturing production data for the period.

NIESR will release its quarterly gross domestic product estimate for March.

Elsewhere, the Bank of England will meet to discuss the level of interest rates for March.

On Friday, most western markets will be closed for the Good Friday public holiday.

Government Bond Auctions this week

Apr 03 09:30 Belgium Auctions 3 & 6M T-bills

Apr 03 09:30 UK Conventional Gilt Auction

Apr 04 08:30 Spain Bono auction

Apr 04 14:30 Sweden Details T-bill auction on Apr 11

Apr 05 08:50 France OAT auction

Apr 05 15:00 US Announces auctions

Apr 05 15:30 Italy Details BOT on Apr 11 & BTP/CCTeu on Apr 12

Originally posted here