Forexpros – The U.S. surged against the Swiss franc on Friday, erasing the week’s losses as renewed concerns over Spain’s financial crisis and the outlook for global economic growth supported safe haven demand.
USD/CHF hit 0.9090 on Thursday, the pairs’ lowest since April 3; the pair subsequently consolidated at 0.9191 by close of trade on Friday, adding 0.28% over the week.
The pair is likely to find support at 0.9090, Thursday’s low and resistance at 0.9253, the high of March 16.
The greenback found support as the cost of insuring Spanish government debt against default rose to an all-time high on Friday, after a report showed that Spain’s banks borrowed a record amount from the European Central Bank in March.
In addition, a member of the ECB’s governing council said that markets were overreacting to concerns about Spain and added that the bank had no reason to resume its bond purchase program to ease pressure on the country’s borrowing costs.
Meanwhile, official data showed that the Chinese economy grew at the slowest pace in almost three years in the first quarter, fuelling concerns over a slowdown in the world’s second largest economy.
China’s gross domestic product grew by 8.1% in the three months to March, disappointing expectations for an 8.3% increase, after recording an expansion of 8.9% in the fourth quarter.
Earlier in the week official data showed that China posted an unexpected trade surplus in March, after imports dropped sharply.
In the U.S., data on Friday showed that consumer sentiment fell in April as rising fuel costs weighed.
In a report the University of Michigan said that its index of consumer sentiment fell to 75.7 from 76.2 in March. Analysts had expected the index to rise to 76.4 in April.
The data came one day after official data showed that U.S. weekly initial jobless claims rose to 380,000, defying expectations for a decline to 355,000.
In the week ahead, investors will be looking at Monday’s U.S. data on retail sales, amid concerns that high fuel costs will hit consumer spending. In addition Spain is due to auction new two and 10-year government bonds on Thursday. The amount to be offered is to be announced on Monday.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, April 16
Switzerland is to publish government data on producer price inflation, a key gauge of consumer inflation.
Meanwhile, the U.S. is to release government data on retail sales, the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. The country is also to release a report on manufacturing activity in New York, as well as government data on net long-term securities transactions and business inventories.
Tuesday, April 17
The U.S. is to produce government data on building permits, an excellent gauge of future construction activity, as well as data on housing starts. The country is also to release official data on industrial production and the capacity utilization rate, leading indicators of economic strength.
Wednesday, April 18
The ZEW Centre for Economic Research is to publish a report on economic expectations in Switzerland, a key indicator of economic health.
Later Wednesday, the U.S. is to produce government data on crude oil stockpiles.
Thursday, April 19
The U.S. is to produce government data on unemployment claims, followed by industry data on existing home sales and a report on manufacturing activity in the Philadelphia area.
Friday, April 20
The International Monetary Fund is scheduled to hold the first of two days of meetings in Washington.