Forexpros – The U.S. dollar retreated from a four-moth high against the Swiss franc on Friday, paring some of the week’s gains as market sentiment stabilized after fears over Greece and Spain abated, dampening demand for the greenback.
USD/CHF hit 0.9499 on Friday, the pair’s highest since January 17; the pair subsequently consolidated at 0.9394 by close of trade, up 0.92% on the week.
The pair is likely to find support at 0.9306, Monday’s low and resistance at 0.9499, Friday’s high and a four-month high.
Market sentiment found support after an opinion poll in Greece indicated that pro-bailout party, New Democracy was leading the polls ahead of elections due to be held on June 17.
The greenback had strengthened broadly earlier in the week as fears over the possibility of a Greek exit from the euro zone dominated market sentiment, after cross party talks aimed at forming a coalition government failed, forcing fresh elections.
Risk appetite was also buoyed ahead of a weekend meeting of the G8 Group, amid expectations that world leaders would offer support to the European Union.
Meanwhile, concerns over the health of Spain’s banking system eased, but the prospect of more state bailouts for lenders lingered. On Thursday, ratings agency Moody’s cut the credit ratings of 16 Spanish banks.
In the U.S., Wednesday’s minutes of the Federal Reserve’s May meeting indicated that several policymakers remained open to further efforts to stimulate the U.S. economy if growth falters or if the risks to the economy became great enough.
Data on Thursday showing that manufacturing activity in the Philadelphia-region contracted for the first time in eight months in May added to concerns over the pace of the U.S. economic recovery.
The Federal Reserve Bank of Philadelphia said that it’s manufacturing index dropped by 14.3 points to minus 5.8 in May from the previous months reading of 8.5.
Analysts had expected the index to rise by 1.5 points to 10.0 in May.
A separate report showed that the number of people who filed for unemployment assistance in the U.S. in the week before last held steady at a seasonally adjusted 370,000, confounding expectations for a decline of 5,000 to 365,000.
In the week ahead, investors will be watching euro zone manufacturing data, amid expectations that activity remains weak, which would increase the chances of more economic stimulus from the European Central Bank.
Market participants will also be awaiting U.S. data on manufacturing orders, as they attempt to gauge the strength of the U.S. recovery.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, May 21
Switzerland is to release official data on consumer climate, a leading indicator of consumer spending.
Tuesday, May 22
The U.S. is to release industry data on existing home sales, a leading indicator of economic health.
Wednesday, May 23
The U.S. is to produce government data on new home sales, a leading indicator of economic health, as well as official data on crude oil stockpiles.
Thursday, May 24
Switzerland is to release official data on the trade balance, the difference in value between imported and exported goods.
The U.S. is to release official data on core durable goods orders and a government report on initial jobless claims, both leading indicators of economic health.
Friday, May 25
Switzerland is to release government data on employment change, a leading indicator of economic health.
The U.S. is to round up the week with revised data from the University of Michigan on on consumer sentiment and inflation expectations.
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