Forex: USD/CHF: ZEW-CS economic expectations well up at 39.4, highest since May 2010

on Dec 18, 2013
Updated: Oct 21, 2019
Listen Wednesday, December 18th:_ The USD/CHF yesterday traded within the range 0.8894 to 0.8831, the latter its lowest point since 4 November 2011, before ending the day at 0.8848 to log a 0.22 percent intraday loss.

Earlier today the Centre for European Economic Research (ZEW) in cooperation with Credit Suisse (CS) released its Financial Market Test Switzerland report, showing that this month economic expectations have grown by 7.8 points to 39.4, the highest level since May 2010 when, as ZEW notes, “the Eurozone crisis was in its early stages”. The indicator measures expectations of financial market experts over the next six-months.

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In the accompanying report, ZEW notes that “after last month’s temporary setback the assessment of the current economic situation in Switzerland is now back to the level recorded in October”. This indicator has risen by 14.8 points to 48.5 in this month’s survey.
The report also indicates that while the surveyed financial market analysts were generally optimistic, expectations were not so bullish as regards the Swiss stock market. That indicator, which reflects expectations for the Swiss Market Index (SMI), fell to 38.6 this month, well down from October’s 62.0.

The report opines that “Stock market expectations are likely to be dampened by increasing indications of an earlier-than-expected tapering by the US Federal Reserve. If securities markets are still too fragile and prices drop, this will also impact on Swiss and European stock markets.”
The USD/CHF has today been trading between 0.8845 and 0.8901, with the psychological 0.8900 level so far proving too strong for a decisive break. Currently the pair is changing hands at 0.8880.

In the United States today, November y/y Building Permits is due out at 13.30 UTC, with analysts expecting 0.99 million. November Housing Starts, out at the same time, is forecast to show an annualized 0.95 million.
The data will be the last for the FOMC to factor into its monetary policy decision, to be announced at 19.00 UTC today.

Any start to QE tapering or even a message as to when it will begin, and/or a change in the core interest rates, will likely strengthen the US dollar in the immediate term at least.
The FOMC’s post-meeting press conference is scheduled to begin at 19.30 UTC.
Today’s resistances: 0.8900, 0.8925 and 0.8950.
Today’s supports: 0.8880, 0.8860 and 0.8850.
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