Forexpros – The Swiss franc closed lower against the U.S. dollar last week, easing off a record high amid reduced safe haven demand after European Union leaders agreed on a new bailout package for Greece.
USD/CHF hit 0.8080 on Monday, the pair’s all-time low; the pair subsequently consolidated at 0.8196 by close of trade on Friday, gaining 1.29% over the week.
The pair is likely to find support at 0.8080, the low of July 18 and the pair’s record low and resistance at 0.8277, the high of July 19.
On Thursday, euro zone leaders announced a new aid package for Greece worth EUR159 billion, with bondholders agreeing to contribute to the bailout. They also expanded the role of the European Financial Stability Facility to purchase bonds from indebted nations, assist troubled banks and offer credit lines.
But the greenback trimmed gains on Friday, as investors questioned whether the new aid deal for Greece was enough to stop the debt crisis from spreading to Italy and Spain and as markets began to focus on efforts to raise the U.S. debt ceiling in order to avert a default.
The U.S. Senate rejected a USD3 trillion deficit reduction plan on Friday, adding to fears over a potential default ahead of the August 2 deadline to raise the country’s USD14.3 trillion debt ceiling.
Ratings agency Standard & Poor’s said Thursday that there is a 50-50 chance that the triple-A credit rating of the U.S. could be cut within three months.
Elsewhere, data on Thursday showed that the record strength of the Swiss franc weighed on exports in June, prompting companies to cut prices to defend foreign market share.
Government data showed that Swiss exports to the euro zone, the nation’s largest trading partner dropped by 14.6% last month.
Meanwhile, the ZEW economic barometer for July plummeted to its lowest since January 2009 with a majority of respondents expecting a deterioration of the economic situation.
Switzerland’s Economy Minister Johann Schneider-Ammann said the situation caused by the weak euro was “alarming” and joblessness could rise sharply.
In the week ahead, as concerns over the sovereign debt crisis in the euro zone recede, investors will be focusing on U.S. efforts to agree on a USD3 trillion deficit-reduction plan. Markets will also be looking towards Friday’s data on U.S. second quarter gross domestic product, in order to gauge the strength of the U.S. economic recovery.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday, as there are no relevant events on this day.
Tuesday, July 26
Switzerland is to publish an index of consumer spending, a leading indicator of economic health.
Later in the day, the U.S. is to publish government data on new home sales, a leading indicator of economic health, as well as data on consumer confidence and house price inflation.
Wednesday, July 27
Switzerland is to publish an economic barometer, which attempts to predict the direction of the economy over the following six months.
Meanwhile, the U.S. is to publish official data on durable goods orders, a leading indicator of production, as well as government data on crude oil stockpiles. Later in the day, the Federal Reserve is to publish its Beige Book, which contains data the bank looks at when making its next interest rate decision.
Thursday, July 28
The U.S. is to release government data on initial jobless claims, a leading indicator of economic health, as well as industry data on pending home sales.
Friday, July 29
The U.S. is to round up the week with preliminary data on second quarter GDP, as well as a preliminary report on the GDP price index and an employment cost index. The U.S. is also to publish data on manufacturing activity in the Chicago area, while the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.
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