Forexpros – The U.S. dollar ended the week sharply lower against the Swiss franc on Friday, as market sentiment improved amid hopes of progress in tackling the debt crisis in the euro zone.
USD/CHF 0.8930 on Friday, the pair’s lowest since November 9; the pair subsequently consolidated at 0.8957 by close of trade on Friday, tumbling 1.96% over the week.
The pair was likely to find support at 0.8902, the low of October 14 and resistance at 0.9047, the high of October 18.
The greenback fell to a three-month low against the Swissie on Friday after Greece launched a bond-swap offer to private-sector creditors, formally inviting them to exchange their holdings of government debt for new securities.
Investor confidence was also boosted after an auction of Italian government debt saw short-term borrowing costs fall, reassuring investors that the threat of contagion from Greece has abated.
Meanwhile, markets were eyeing the European Central Bank as it is scheduled to launch a second liquidity operation next week, offering unlimited three-year loans to European lenders, after the bank carried out a similar successful operation in December.
Risk appetite was also boosted by improving U.S. data. A report by the University of Michigan on Friday showed that its index consumer sentiment rose to 75.3 this month from 75 in January.
On Thursday, the U.S. Department of Labor said that the number of individuals filing for initial jobless benefits in the week ending February 18 held steady at 351,000, the fewest since March 2008.
Earlier in the week, official data showed earlier that Switzerland’s trade surplus narrowed unexpectedly in January, falling to CHF1.55 billion from a surplus of CHF2.01 billion the previous month.
Analysts had expected Switzerland’s trade surplus to widen to CHF2.50 billion in January.
In the coming week, markets will be watching developments in the euro zone, with investors eyeing the uptake on Wednesday’s refinancing operation by the ECB, as well as the outcome of votes in Finland and Germany on Greece’s bailout.
Investors will also be focusing on Wednesday’s U.S. data on fourth quarter economic growth, in order to gauge the strength of the country’s economic recovery.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets. The guide skips Friday as there are no relevant events on this day.
Monday, February 27
The U.S. is to publish industry data on pending home sales, a leading indicator of economic health.
Tuesday, February 28
Switzerland is to produce an official report on the country’s employment level, an important indicator of consumer spending. Later in the day, Swiss National Bank Interim Governor Thomas Jordan is due to speak.
Later Tuesday, the U.S. is to produce official data on durable goods orders, a leading indicator of production, followed by industry data on house price inflation and consumer confidence.
Wednesday, February 29
Switzerland is to publish a report on the KOF economic barometer, which is a combined reading of 12 economic indicators.
The U.S. is to release a preliminary report on fourth-quarter GDP, the broadest measure of economic activity and the primary gauge of the economy’s health. The country is also to report on manufacturing activity in the Chicago area.
Also Wednesday, Federal Reserve Chairman Ben Bernanke is also due to testify on the semi-annual monetary policy report before the House Financial Services Committee in Washington.
Thursday, March 1
Switzerland is to publish an official report on fourth-quarter GDP, followed by industry data on business activity.
Also Thursday, the U.S. is to release government data on unemployment claims as well as personal consumption expenditures and personal spending. Meanwhile, the Institute for Supply Management is to produce a report on manufacturing activity. In addition, Fed Chairman Bernanke is due to testify for a second day before the Senate Banking Committee.
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