Optimism Over Swiss Bank Earnings Hurts USD CHF

The USD CHF finished the week lower reversing the optimism at thebeginning of the week. Late last week the Swiss National Bank triggereda strong rally when it warned that it was poised to intervene if theEUR CHF continued to weaken.

The USD CHF finished the week lower reversing the optimism at the beginning of the week. Late last week the Swiss National Bank triggered a strong rally when it warned that it was poised to intervene if the EUR CHF continued to weaken. Traders bought Dollars and sold Swiss in anticipation of the intervention but the rally quickly dissipated as it became clear that it was only a warning.

The Swiss Franc gradually picked up strength all week buoyed by the news that Credit Suisse had posted earnings better than analysts had forecast. This led to more speculation that the Swiss banking sector was on the road to recovery. Traders are now eagerly awaiting the results from UBS.

News that the U.S. would auction a little over $100 billion in Treasury instruments the first three days next week helped weaken the USD CHF as concerns were raised over the U.S. Treasury’s ability to fund this more than substantial increase in government debt. More heat on the USD CHF came from the $40 plus rise in gold.

The increase in U.S. debt is likely to keep the pressure on the USD CHF next week as well as optimism over a recovery in the Swiss banking sector. Traders should brace themselves however for a reversal to the upside if negative news begins to leak out about the stability of a major U.S. financial institution.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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