EUR/CHF Weekly Fundamental Analysis March 16-24, 2012, Forecast
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 is trading at 1.2064 as it moved in a small range this week as the euro bounced up and down on mostly news from the US. The Franc rose to a high of 1.2147 and hit a bottom of 1.2053.
Switzerland’s central bank on Thursday said it would continue to cap the strength of the Swiss franc, pledging to enforce a minimum 1.20 Swiss franc exchange rate versus the euro “with the utmost determination.”
UBS AG (UBS), Switzerland’s largest bank by market capitalization, Friday raised it forecasts for Swiss economic growth for this year and next, and expects the country to avoid slipping into a recession despite the effects of the strong franc.
This recent report, would suggest that we should see some movement by the Franc this week, we might see the pair fall to the low of the week, 1.2053
Historical
Highest: 1.5193 CHF on 10 Oct 2009.
Average: 1.3271 CHF over this period.
Lowest: 1.026 CHF on 10 Aug 2011.
Major Economic Events for the week of March 19-24
|
Mar. 20 |
01:30 |
AUD |
Monetary Policy Meeting Minutes |
|
Mar. 21 |
10:30 |
GBP |
MPC Meeting Minutes |
|
15:00 |
USD |
Existing Home Sales |
|
|
22:45 |
NZD |
GDP (QoQ) |
|
|
Mar. 22 |
10:30 |
GBP |
Retail Sales (MoM) |
|
13:30 |
Core Retail Sales (MoM) |
||
|
13:30 |
USD |
Initial Jobless Claims |
|
|
17:00 |
EUR |
ECB President Draghi Speaks |
|
|
Mar. 23 |
12:00 |
CAD |
Core CPI (MoM) |
|
15:00 |
USD |
New Home Sales |
The week’s highlights
In Australia, data on skilled vacancies and merchandise imports is set for release.
The Bank of England will also release the minutes of its last meeting, while data on housing starts and building approvals is due in the United States.
The European Union will release draft proposals regarding the regulation of shadow banks.
The International Monetary Fund will host high level talks at the two day China-India conference in New Delhi.
RBA Governor Glenn Stevens will speak at an investment conference in the week ahead.
Monday
The National Association of Home Builders housing market index for March will be released in the United States on Monday.
Tuesday
The RBA will release the minutes of its March policy meeting, where it kept the official cash rate on hold for the second consecutive time. Investors will watch carefully for any reflection on the expected direction that rates will take over the rest of the year. Most economists are still expecting at least one more rate cut in 2012.
US February housing starts figures and building approval data released. Economists are forecasting housing starts to be flat for the month, at around 700,000.
In the United Kingdom, February consumer price index data is awaited, alongside retail price index figures for the month.
Wednesday
The international merchandise figures for February reported by the Australian Bureau of Statistics. Also the Department of Education and Workplace Relations will release its skilled vacancies index for February.
February existing home sales figures in the US, along with the weekly Energy Information Administration petroleum status report. Analysts expect the data to show a rise in home sales of about two per cent.
Thursday
Mortgage Bankers Association mortgage applications figures are also due.
Elsewhere, the Bank of England will release the minutes of its last policy meeting.
UK public sector net borrowing for February is also due.
Also due is the highly anticipated jobless claims data is out in the US. February retail sales data is expected in the UK.
Friday
US new home sales figures for February and experts expect sales to have risen by 6,000 to 327,000.
Economic Releases for the week of March 12-16
|
Mar. 13 |
JPY |
Interest Rate Decision |
0.10% |
0.10% |
0.10% |
|
EUR |
German ZEW Economic Sentiment |
22.3 |
10.5 |
5.4 |
|
|
USD |
Core Retail Sales (MoM) |
0.9% |
0.8% |
1.1% |
|
|
USD |
Retail Sales (MoM) |
1.1% |
1.1% |
0.6% |
|
|
USD |
Interest Rate Decision |
0.25% |
0.25% |
0.25% |
|
|
Mar. 14 |
GBP |
Claimant Count Change |
7.2K |
6.0K |
7.0K |
|
Mar. 15 |
CHF |
Interest Rate Decision |
0.00% |
0.00% |
0.00% |
|
USD |
Initial Jobless Claims |
351K |
356K |
365K |
|
|
Mar. 16 |
USD |
Core CPI (MoM) |
0.1% |
0.2% |
0.2% |
|
USD |
CPI (MoM) |
0.4% |
0.4% |
0.2% |
Government Bond Auctions (this week)
Mar 19 n/a Greece CDS Auction
Mar 19 10:10 Slovakia Bond auction
Mar 19 10:10 Norway T-bill auction
Mar 20 09:30 Spain 12 & 18M T-bill auction
Mar 21 10:10 Sweden Nominal bond auction
Mar 21 10:30 Germany Eur 5.0bn Mar 2014 Schatz
Mar 21 10:30 Portugal Eur 0.75-1.0bn 4 & 6M T-bills
Mar 22 10:10 Sweden I/L bond auction
Mar 22 10.30 UK Auctions 0.625% 2042 I/L Gilt
Mar 22 15:00 US
Announces auctions of 2Y Notes on Mar 27, 5Y Notes on Mar
28 & 7Y Notes on Mar 29
Originally posted here
