Market Overview

USD/CHF Steady as Eurogroup gives nod to Greek aid

USD/CHF is not showing much movement on the final day of the trading week. The pair has been fairly quiet following an uneventful release on Thursday from the SNB. In its Monetary Policy Assessment, there was no change to the Swiss central bank's forecasts for inflation and growth. The SNB is predicting that for 2012, inflation will fall by 0.7%, and growth will increase by 1.0%. As expected, the SNB kept the Libor three-month rate pegged at 0% – 0.25%.

After months of uncertainty, the ongoing Greek debt saga appears to be moving in the right direction. Eurozone finance ministers finally agreed to release the second installment of bailout funds to Greece. At a meeting in Brussels on Thursday, the Eurogroup approved the release of the second installment of the Greek bailout, following the successful completion of the Greek government's debt buyback scheme.

The EFSF will release a total amount of EUR 49.1 billion, which will be paid out in several installments. Greece is scheduled to receive EUR 34.3 billion in the next few days, with the remaining funds to be delivered by March 2013. The buyback program and bailout package are critical milestones in getting the struggling country back on its financial feet. If all goes well, Greece's debt to GDP ratio is expected to drop to 124 per cent by 2020. There was more news out of Brussels, as the Eurogroup approved an agreement whereby the ECB will become the single supervisor for the 200 largest banks in the Eurozone.

The move aims to achieve closer financial integration in the Eurozone and provide protection for the euro from future financial crises. Under the agreement, financial institutions finding themselves in trouble would be able to directly approach the ESM for funds, rather than go through their national governments. If all goes smoothly, the ECB should begin its role as “super bank commissioner” no later than January 2014.

Across the ocean, the markets continue to absorb the news of further monetary easing by the Federal Reserve, in the form of QE4. Under this program, the Fed will purchase an additional $45 billion per month in Treasury holdings in order to boost the US economy. The markets will be busy on Friday, with lots of economic releases from both Europe and In the US, today's key release is US Core CPI.

USD/CHF for Friday, Dec 13, 2012

 


 

USD/CHF Dec 14 at 10:35 GMT
0.9243 H: 0.9276 L: 0.9226

S3 S2 S1 R1 R2 R3
0.9065 0.9164 0.9240 0.9315 0.9385 0.95

USD/CHF Technical
In the Asian session, the pair was steady, consolidating at 0.9237. USD/CHF lost some ground early in the European session but has bounced higher. The support line of 0.9240 remains under strong pressure. On the upside, 0.9315 continues to provide strong resistance, as the pair has been unable to sustain a breakout into higher territory. The round number of 0.95 continues to act as the top of the range. On the downside, the bottom of the range lies at 0.9240.
• Current range: 0.9240 to 0.9315

Further levels in both directions:
• Below: 0.9240, 0.9164, 0.9065 and 0.90.
• Above: 0.9315, 0.9385, 0.95, 0.9650 and 0.9783.

OANDA's Open Position Ratios
USD/CHF bias remains strongly in favor of long positions. Traders continue to wait for some sign of direction from the pair, which continues to trade in a narrow range, unable to break out in either direction. Unless there is some unexpected movement on Friday, the current ratio will likely remain unchanged.

The swissie has quietly posted some gains against the dollar over the course of the week. In Friday's trading, USD/CHF is showing more movement after a very quiet Asian session, but is having difficulty breaking out in either direction. If this trend continues, we could see the pair continue drifting right into the weekend.

USD/CHF Fundamentals
• All Day: EU Economic Summit (Day 2).
• 13:30 US Core CPI. Estimate +0.2%.
• 13:30 US CPI. Estimate -0.2%.
• 14:00 US Flash Manufacturing PMI. Estimate 52.6 points.
• 14:15 US Capacity Utilization Rate. Estimate 77.9%.
• 14:15 US Industrial Production. Estimate +0.3%.

*Key releases are highlighted in bold
*All release times are GMT

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