As the greenback moved downward after the Trump conference, the Swiss Franc extended its gains after the opening bell on Friday. The Swiss eventually acquired additional support from the upbeat tone of the nation’s economy and as the central bank suggested profit hike.
At the time of writing, the pair was trading at 1.0115 with the USD trading 0.35 percent lower against the CHF from the previous session. The pair is expected to find resistance its first resistance at 1.01000 and a breakthrough could take it to the next resistance level at 1.01190. Also, the pair is expected to find support at 1.00548 and a fall through could take it to the next support level at 1.00330.
As of 14:57 UTC, the pair was trading below its 20-day SMA of 1.00936 and 50-day SMA of 1.01147. Currently, the USD/CHF wallowed on the December-low of 1.00600 levels.
Elsewhere, the economic stance in Switzerland received an upbeat outlook after the Swiss National Bank raised its profit expectation.
At the start of the week, the SNB released a statement, whereas the annual profit was expected to be around CHF 24 billion. Apparently the US dollar lost against the Swiss Franc in the succeeding sessions.as USD/CHF settled at 1.01100 to 1.01600 levels.
“According to provisional calculations, the Swiss National Bank (SNB) will report a profit in the order of over CHF 24 billion for the 2016 financial year. The profit on foreign currency positions amounted to more than CHF 19 billion. A valuation gain of CHF 3.9 billion was recorded on gold holdings.”
In the previous monetary policy statement of the Bank, the interest rate at -.075 percent was left unchanged and the three-month Libor was kept between –1.25% and –0.25%. The SNB recognized the improvement of the global economy and retained its optimistic outlook for the economy.
To sustain the effort in stabilizing price developments and economic activity, the Bank intends to utilize its expansionary monetary policy while maintaining its negative rates. In general, the SNB aims to lessen the pressure on the Swiss currency as it expresses its willingness to intervene in the foreign exchange market.
For these reasons, the Swiss Franc will probably accumulate moderate gains and moderate losses in the coming days. In case the volatility in the USD lingers for a long period of time, the Swiss Franc may hold long-term gains. However, if ever Trump will clarify its economic stance after he takes the office, the market confidence may come back in the US, boosting the US currency.
It is quite reasonable that the Swiss Franc may suffer in the strength of the greenback, but the nation’s economic recovery could provide a different story. A stable economy is one of the primary considerations in pushing a rate hike. Also, the British and European regions might face an adjustment after the “hard-Brexit”, providing an unidentified impact to other major currencies yet; it could be a favorable decision for the Swiss currency.
The Bank is scheduled to release its annual profit result with definitive figures on March 6 while the Annual Report will be published on March 23.
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