Swiss franc rises on strong Swiss KOF
|The Swiss franc has taken a pause from this week’s rally. Currently, USD/CHF is trading at 0.8847, up 0.08% on the day. USD/CHF is in positive territory this week, and dipped to a low of 0.8815 earlier on Wednesday. This marked the currency’s lowest level since May 2014. This news will not provide any holiday cheer for policymakers at the Swiss National Bank. For months, the bank has tried to stem the appreciation of the Swiss franc in order to maintain price stability, but investors remained attracted to the safe-haven Swissie as the financial markets remain vulnerable to the detrimental effects of Covid-19. The SNB has kept interest rates at -0.75%, among the lowest in the world. In addition, the SNB continues to buy up billions of dollars, to such an extent that the US Treasury recently labeled Switzerland a currency manipulator. The Swiss franc has gained 2.70% in December, and with the US expected to implement further stimulus in early 2021, the sagging US dollar is expected to continue losing ground.
KOF Economic Barometer beats forecast
The KoF Economic Barometer, a key indicator of business confidence, has been losing ground since September. This trend was expected to continue in December, but the index surprised the markets and rose from 103.5 to 104.3. The street consensus stood at 101.4. There was more positive news from the Credit Suisse Economic Expectations index, which is on a tear. The index jumped to 46.8 in November, up sharply from 30.0 beforehand. The Swiss franc reacted positively to the news and registered gains of 0.54%.
USD/CHF Technical
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USD/CHF has broken below support at 0.8846. Below, there is support at 0.8797.
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There is resistance at 0.8933, followed by resistance at 0.8971.
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The pair broke below the 10-day MA line on Tuesday, which is a sign of a downtrend.
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