Forex - USD/CHF weekly outlook: February 21-25

Forex Pros – Last week the Swiss franc advanced to a two-week high against the U.S. dollar, as escalating concerns over unrest in the Middle East boosted safe haven demand for the currency.

USD/CHF hit 0.9438 on Friday, the pair’s lowest since February 3; the pair subsequently consolidated at 0.9441 by close of trade on Friday, tumbling 3.06% over the week.

The pair is likely to find support at 0.9327, the low of February 2 and a one-month low and resistance at 0.9601, last Thursday’s high.

Worry over a possible confrontation between Israel and Iran, with Iranian warships reported to be on their way to the Suez Canal, boosted demand for the franc while investors shunned the dollar, sometimes viewed as a safe haven, because of the U.S.'s strong ties to Israel.

The Swiss franc was also lifted after the president of the Swiss National Bank, Philipp Hildebrand, said that with inflation moving higher, interest rates could not remain at ultra-low rates forever and would have to normalise.

He added that there was no miracle solution to rein in Swiss franc strength and that it could help in containing inflationary pressures.

Next week, the biggest focus will be the release on Friday of preliminary data on fourth quarter U.S. gross domestic product. Before that, markets in the U.S. are to remain closed on Monday for a national holiday.

Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.

Monday, February 21

Markets in the U.S. are to remain closed for the President’s Day holiday.

Tuesday, February 22

Switzerland is to publish government data on its trade balance; the difference in value between imported and exported goods over the month, while later in the day the country is to publish the results of a consumption index.

Later in the day, the U.S. is to publish data on consumer confidence compiled by the Conference Board as well as industry data on house prices and a report on manufacturing activity in Richmond.

Wednesday, February 23

Switzerland is to publish official data on producer price inflation, a leading indicator of consumer inflation, while the U.S. is to publish industry data on existing home sales, a leading indicator of economic health.

Thursday, February 24

Switzerland is to publish government data on the employment level, which measures the number of employed people during the previous quarter, a leading indicator of economic health.

Meanwhile, the U.S. is to publish a flurry of data, with reports on durable goods orders, a leading indicator of production as well as data on initial jobless claims, an important signal of overall economic health. The country is also to publish a report on new home sales.

Friday, February 25

Switzerland is to publish the results of an economic index, compiled by the KOF Economic Research Agency, designed to predict the direction of the economy over the following six months.

The U.S. is to round up the week with preliminary data on fourth quarter GDP, the broadest measure of economic activity and the primary gauge of the economy's health. Meanwhile, the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.