Forexpros – Last week saw the U.S. dollar weaken against the Swiss franc, falling to an almost one-month low as risk appetite recovered on the back of hopes for a plan to stem the financial crisis in the euro zone, dampening demand for the safe haven greenback.
USD/CHF hit 0.9272 on Monday, the weeks high; the pair subsequently consolidated at 0.8912 by close of trade on Friday, tumbling 3.85% over the week.
The pair is likely to find support at 0.8685, the low of September 16 and resistance at 0.9110, last Wednesday’s high.
On Friday, France and Germany appeared to move closer to an agreement on a plan to recapitalize European lenders, bolster the firepower of the euro zone’s bailout fund, the European Financial Stability Facility and restructure Greek sovereign debt.
At the conclusion of the G-20 summit on Saturday, world financial leaders urged the European leaders to deal “decisively” with the crisis.
European leaders hope to complete the rescue plan at a summit on October 23, in time to present to a meeting of G-20 leaders early next month.
Risk appetite was also boosted after data on Friday showed that U.S. retail sales rebounded in September, increasing at the fastest rate in seven months.
The Commerce Department said sales rose 1.1% last month, after a revised 0.3% increase in August, outstripping expectations for a 0.5% gain.
Earlier in the week, the franc also strengthened against the euro, as investors trimmed expectations that the Swiss National Bank will adjust its minimum exchange rate target against the euro.
Early last month, the SNB imposed a franc ceiling of 1.20 per euro and resumed purchases of foreign currencies in order to reduce the risk of recession and deflation in the Swiss economy.
In the week ahead, any signs that European Union leaders are making progress on steps to contain the debt crisis in the euro zone look likely to continue to support risk appetite. Meanwhile, the U.S. is to publish a flurry of economic data, with reports on manufacturing, housing and inflation to come.
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 Friday, as there are no relevant events on this day.
Monday, October 17
The U.S. is to publish government data on industrial production, an important indicator of economic health, as well as a report on the capacity utilization rate. The country is also to publish data on manufacturing activity in New York state, a leading indicator of economic health.
Tuesday, October 18
The U.S. is to produce government data on producer price inflation, a leading indicator of consumer inflation, as well as data on the balance of domestic and foreign investment in the U.S. Meanwhile, Federal Reserve Chairman Ben Bernanke is to speak in Boston; his remarks will be closely watched for any clues to the future possible direction of monetary policy.
Wednesday, October 19
The U.S. is to release a flurry of data, with a government report on building permits, an excellent gauge of future construction activity as well as data on housing starts, a leading indicator of economic health.
The U.S. is also to publish data on consumer price inflation, which accounts for the majority of overall inflation. In addition, the country is to publish data on crude oil stockpiles, while the Fed is to publish its Beige Book, which looks at current economic conditions.
Thursday, October 20
Switzerland is to release official data on the trade balance, the difference in value between imports and exports over the month. Meanwhile, the ZEW Centre for Economic Research is to publish a report on Swiss economic expectations, a leading indicator of economic health.
The U.S. is to round up the week with its weekly report on initial jobless claims, as well as data on manufacturing activity in Philadelphia and an industry report on existing home sales.
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