Swissie Dips as KOF Barometer Slides

Fundamental analysis of Forex market

The Swiss franc has lost ground in the Monday session. USD/CHF is currently trading at 0.9159, up o.52%. The Swissie has rebounded after a losing week, the first in a month.

KOF Economic Barometer 

In Switzerland, the well-respected KOF Economic Barometer fell for a third successive month. The index slowed to 113.5 in August well of the consensus 126.3 and below the July reading of 130.9. Still, it should be remembered that the May reading of 143.2 marked an all-time high and the index remains comfortably above the long-term average of 100. If the slowdown continues in the upcoming months, however, sentiment towards the Swiss franc could weaken.

The markets will be keeping an eye on Thursday, with three Swiss releases on the calendar. GDP for Q1 is expected to rebound at 2.0% (QoQ), after a read of -0.5% in the first quarter. We’ll also get a look at CPI and Retail Sales, so I expect the Swiss franc to be busy on Thursday.

Risk sentiment has risen after Fed Chair Jerome Powell’s Jackson Hole speech on Friday. Powell highly-anticipated remarks didn’t really surprise the markets, with the Fed Chair reiterating that the Fed would likely begin tapering before the end of the year. At the same time, Powell said that rate hikes were not imminent, as the economy still had “much room to cover” before full employment was achieved.

The next key date for investors to circle on their calendars is September 22, when the Fed holds its next policy meeting. Fed officials have been hinting that a timeline for tapering could be announced on that date. However, the timing of a rate hike is less clear. In his speech, Powell reiterated that there was no link between tapering and a rate hike. Still, the announcement of a taper is likely to raise speculation about a rate hike and would be a bullish event for the US dollar.

USD/CHF Technical

  • On the upside, 0.9172 is under pressure in resistance. Above, there is resistance at 0.9233
  • There is support at 0.9078. This is followed by support at 0.8970