USD/CHF oscillates at low levels with limited downside

On Monday (December 26), the USD/CHF oscillated lower in the European market, but the exchange rate was supported at the 0.9340 line. As a whole, it still maintains a narrow range of shocks. The financial markets in Europe and the United States continue to be closed due to Christmas holidays, and the market is extremely light.

Global risk appetite rose during the day. Prices of commodities, such as stocks and crude oil, rose. The dollar fell under pressure and dragged down USD/CHF.

A survey conducted for the SNB policy meeting showed that as 2011 neared the end of the year, the proportion of companies under pressure due to the appreciation of the Swiss franc increased.

The SNB’s December 15 meeting decided to keep the lower limit of USD/CHF exchange rate unchanged at 1.20. The results of the survey conducted at this meeting showed that the appreciation of the Swiss franc has a negative impact on 63% of the companies, which was 58% before one quarter.

The Swiss National Bank has been under heavy pressure to let the Swiss franc depreciate further. The Swiss parliament again on Wednesday called for a change in the Swiss franc exchange rate limit. Analysts said that the reasonable value of the EUR/CHF exchange rate should be around 1.30-1.40.

Due to the weakening global demand and the appreciation of the Swiss franc, the Swiss economy has shown signs of slowing down. The Swiss National Bank estimates that the Swiss economy will expand by 0.5% in 2012.

The SNB stated in its quarterly report that due to the global economic downturn and the strength of the Swiss franc hurting export orders, the Swiss economy is expected to soften in the coming months.

Investors will continue to support USD/CHF as the SNB is still likely to intervene in the foreign exchange market.

Technically, USD/CHF daily indicators are mixed, MACD and Stochastic are both bearish, but the 5 and 15 moving averages are still sideways; the intraday chart formed on the K-line chart last Friday. During the period, resistance is focused on 0.9398, and support is concerned with 0.9307.

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