Forex - USD/CHF weekly outlook: January 29 - February 3

Forexpros - The U.S. dollar tumbled to an almost two-month low against the Swiss franc on Friday, amid growing hopes for an agreement to restructure Greece’s sovereign debt.

USD/CHF hit 0.9113 on Friday, the pair’s lowest since December 1; the pair subsequently consolidated at 0.9122 by close of trade on Friday, plummeting 2.66% over the week.

The pair is likely to find support at 0.9065, the low of November 30 and resistance at 0.9235, the high of November 17.

Over the weekend, Greek Finance Minister Evangelos Venizelos said Athens was one step away from concluding a deal on the EUR100 billion debt write-down scheme.

An agreement is necessary for Greece to secure the next tranche of bailout funds in order to prevent a sovereign debt default. Greece does not have enough money to cover a EUR14.5 billion bond repayment due March 20.

Meanwhile, sentiment remained supported although Fitch Ratings downgraded six European sovereigns including Italy. However, Fitch reaffirmed its rating on Ireland and left France and Germany, the euro zone's biggest members, untouched.

Earlier Friday, official data showed that the U.S. economy grew more slowly than expected in the fourth quarter of 2011.

The Commerce Department said U.S. gross domestic product expanded by 2.8% in the three months to December, the fastest quarterly rate in one-and-a-half years, but disappointing expectations for an increase of 3%.

The greenback came under broad selling pressure on Wednesday after Federal Reserve Chairman Ben Bernanke pushed back the timing of a possible interest rate increase until late 2014 and indicated that the bank may embark on a third round of quantitative easing.

In Switzerland, data showed on Friday that the country’s KOF economic barometer fell more-than-expected in January, reentering negative territory for the first time since 2009, indicating that the economy is likely to contract slightly in the coming months.

In the coming week, investors will be closely watching developments in Greece as well as the outcome of Monday’s European Union summit. Also Monday, Italy is to hold an auction of long term government bonds, in what will be an important test of demand for the country’s debt.

In addition, the U.S. is to publish data on service and manufacturing sector growth while Friday’s data on non-farm payrolls will be an important gauge of the recovery in the labor market.

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

Monday, January 30

In the U.S., the Bureau of Economic Analysis is to release a report on its price index of core personal consumption expenditures, followed by data on personal spending, which accounts for a majority of overall economic activity.

Tuesday, January 31

Switzerland is to release a report by UBS on its consumption indicator, which is a combined reading of five economic indicators. 

Later in the day, the U.S. is to produce government data on employment cost inflation, a key gauge of consumer inflation, followed by industry data on house price inflation and the purchasing managers’ index in Chicago. The country is also to release data on consumer confidence.

Wednesday, February 1

The U.S. is to release industry data on non-farm employment change, an important indicator of consumer spending. The country is also to produce a report by the Institute for Supply Management on manufacturing activity, followed by government data on crude oil stockpiles.

Thursday, February 2

Switzerland is to release official data on the trade balance, the difference in value between imported and exported goods.

The U.S. is to produce government data on unemployment claims as well as preliminary data on nonfarm productivity and unit labor costs. Later in the day, Fed Chairman Ben Bernanke is to testify on the economic outlook and federal budget situation before the house budget committee.

Friday, February 3

The U.S. is to round up the week with official reports on non-farm employment change and the country’s unemployment rate. The country is also to release official data on average hourly earnings and factory orders, as well as a report by the Institute for Supply Management on service sector activity.