Forexpros – The U.S. dollar fell more than 1.5% against the Swiss franc on Friday, as markets rallied on the back of renewed hopes for progress on the euro zone debt crisis and better-than-forecast U.S. employment data, dampening dollar demand.
USD/CHF hit 0.9897 on Thursday, the pair’s highest since July 26; the pair settled at 0.9698 by close of trade on Friday, down 0.67% on the week.
The pair is likely to find support at 0.9579, the low of July 5 and resistance at 0.9807, the high of July 27.
The greenback came under broad selling pressure on Friday after European Central Bank President Mario Draghi indicated Thursday that the bank would restart its bond buying program, to help lower Spanish and Italian borrowing costs.
Markets initially turned lower following Draghi’s remarks, after he indicated that any intervention by the ECB to calm bond markets would not come before September.
Draghi also said that any steps by the ECB were conditional on euro zone governments experiencing difficulty on bond markets activating the bloc’s bailout funds to purchase government bonds and accepting strict conditions and supervision.
Risk appetite was also boosted after the U.S. Department of Labor said the economy added 163,000 jobs in July, the biggest increase since February and outstripping expectations for an increase of 100,000, following a downwardly revised increase of 64,000 the previous month.
However, the U.S. unemployment rate unexpectedly ticked up to 8.3%, from 8.2% in the preceding month, keeping alive speculation over further monetary stimulus from the Federal Reserve.
On Wednesday, the Federal Reserve refrained from implementing fresh easing measures following its policy meeting, but the central bank said economic growth had slowed in the first half of the year and reiterated that it stood ready to provide additional stimulus as necessary.
In Switzerland, data on Thursday showed that retail sales rose 3.7% in June, beating expectations for a 2.8% increase, while a separate report showed that the country’s SVME manufacturing index rose unexpectedly in July, but remained in contraction territory for the fourth month.
In the week ahead, market participants will continue to keep a close eye on developments in the euro zone, as investors continue to digest the implications of the ECB’s recent decisions.
Markets will also be paying close attention to speeches by Fed Chairman Ben Bernanke on Monday and Tuesday, amid ongoing speculation over the possibility of more easing from the U.S. central bank.
Meanwhile, the Swiss National Bank is to publish a report on foreign currency reserves.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, August 6
In the U.S. Fed Chairman Ben Bernanke is to speak; his comments will be closely watched for any indications of the future possible direction of monetary policy.
Tuesday, August 7
Switzerland is to release government data on consumer price inflation, which accounts for the majority of overall inflation.
In addition, the SNB is to release a report on foreign currency reserves, which give an important insight into the central bank’s currency market operations, particularly the defense of the Swiss franc’s exchange rate floor against the euro.
Later Tuesday, Fed Chairman Ben Bernanke is to speak at an event in Washington DC.
Wednesday, August 8
Switzerland is to publish government data on consumer climate, a leading indicator of consumer spending.
The U.S. is to release government data on labor costs and productivity, leading indicators of consumer inflation. The country is also to release official data crude oil stockpiles.
Thursday, August 9
The U.S. is to release official data on the trade balance, the difference in value between imported and exported goods, as well as the weekly report on initial jobless claims.
Friday, August 10
The U.S. is to round up the week with official data on import prices and the federal budget balance.
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