Swiss franc climb continues

The Swiss franc is pointing downwards for a second successive day. Currently, USD/CHF is trading at 0.8852, down 0.28% on the day.

SNB unable to curb enthusiasm for the Swiss franc

The Swiss National Bank continues to battle the appreciation in the Swiss franc, but policymakers can’t be pleased with the results. USD/CHF has fallen 2.62% in December and touched a low of 0.8822 earlier in the month, its lowest level since January 2015. The SNB can’t be blamed for trying, however. Interest rates are at -0.75%, among the lowest in the world. The SNB has been buying up dollars in order to protect the Swiss franc, to such an extent that it raised the ire of the US treasury, which recently labeled Switzerland a currency manipulator.

The prognosis for the exchange rate could dampen the Christmas spirit for the SNB, as the depreciation of the US dollar is expected to continue into 2021. The downtrend can be attributed to negative US real yields, the current account deficit and the Federal Reserve’s ultra-accommodative monetary policy. It appears that even with the SNB’s admirable efforts, the Swiss franc’s rise against the US dollar will continue into next year.

It’s a very light data calendar this week, but we’ll get a look at the KOF Economic Barometer for December, a key gauge of business confidence in the Swiss economy. In September the index rose to 113.8, but has fallen steadily and dropped to 103.5 in November. The downtrend is expected to continue in December, with a street consensus of 101.4. As well, Credit Suisse releases its Economic Expectations index, which posted a sharp gain in October as it climbed from 2.3 to 30.0.

USD/CHF Technical

• USD/CHF faces resistance at 0.8933. Above, there is resistance at 0.8997, protecting the 0.88 level
• 0.8846 was tested early in the North American session. The next support level is at 0.8797
• The pair broke below the 10-day MA line on Monday and continues to move to lower ground

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