Forexpros – The U.S. dollar closed higher against the Swiss franc on Friday, trading just beneath a six-month high, after last month’s intervention by the Swiss National Bank to curb the appreciation of the franc dampened the safe haven appeal of the currency.
USD/CHF hit 0.9314 on Thursday, the pair’s highest since April 1; the pair subsequently consolidated at 0.9268 by close of trade on Friday, gaining 1.78% over the week.
The pair is likely to find support at 0.9076, Monday’s low and short-term resistance at 0.9314, Thursday’s high and a six-month high.
The dollar found support after ratings agency Fitch downgraded its ratings on Spain and Italy, reigniting fears over the financial crisis in the euro zone. Italy’s rating was cut to A+ from AA- while Spain’s rating was reduced by two notches to AA- from AA+.
On Thursday, a report showed that the SNB’s currency holdings rose to a record last month after the bank imposed a minimum exchange rate target of 1.20 against the euro on September 6th and said it would enforce the limit with “the utmost determination.”
The SNB’s foreign exchange reserves rose by approximately CHF30 billion in September, to CHF282 billion. The central bank declined to comment on how much of the increase was due to intervention.
Also Thursday, official data showed that Swiss consumer price inflation rose 0.3% in September, reversing the same drop a month earlier and above the expected 0.1% increase.
On Friday, Switzerland’s Director of Labor Serge Gaillard said the employment market was still in “good shape” but the unemployment rate looks set to rise as a slowdown in global growth and the persistent strength of the franc weighs.
The comments came after official data showed that Switzerland’s unemployment rate remained unchanged at 2.8% for a fourth consecutive month in September.
Gaillard said the jobless rate is likely to start edging higher from October as the Swiss economy slows.
Meanwhile, in the U.S. the Department of Labor said nonfarm payrolls rose by 103,000 in September, far more than the expected 53,000 gain, while payrolls for the previous two months were revised up by a total of 99,000. The unemployment rate remained unchanged at 9.1%.
Earlier in the week, Federal Reserve Chairman Ben Bernanke said that the U.S. economic recovery has been far less robust that the Fed had hoped, adding that the central bank was ready to do more to help the U.S. economy.
In the coming week, developments in the euro zone look likely to remain in the spotlight, amid ongoing speculation that Greece may have to default. Meanwhile, investors will be looking towards Friday’s U.S. data on retail sales 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.
Monday, October 10
In the U.S., debt markets will remain closed for the Columbus Day holiday, while stock markets will be open as usual.
Tuesday, October 11
The U.S. is to publish a report on economic optimism, an important indicator of economic health.
Wednesday, October 12
The Federal Reserve is to publish the minutes of its most recent policy-setting meeting.
Thursday, October 13
Switzerland is to produce government data on producer price inflation, a leading indicator of consumer inflation.
Later in the day, the U.S. is to release its weekly government report on initial jobless claims, as well as data on crude oil stockpiles, the federal budget balance and the trade balance.
Friday, October 14
The U.S. is to round up the week with official data on retail sales, the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to publish official data on import prices and business inventories. In addition, the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.
Also Friday, the G20 Group is to hold the first day of a two-day summit meeting.
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