Risk sentiment continues to have influence on price action for the pair as the dollar has been strongly correlated with demand for high yeiding assets. However, we saw greenback weakness following the U.S. NFP report which could be a sign that the correlation is weakening. Therefore, Swiss fundamentals may grow in importance in determining future direction and traders should keep an eye on this week’s releases which include unemployment and consumer prices. Inflation is expected to remain unchanged at -0.8% which will keep the SNB on alert as they try and prevent deflationary pressures. Costs for domestic goods continue to fall as consumers remain reluctant to open up their wallets as rising unemployment weighs on consumption. Indeed, the unemployment rate is forecasted to rise to 3.9% from 3.8% as companies hurt by a decline in foreign demand are still in cost slashing mode. However, if demand from abroad continues to rebound as we saw in the SVME-PMI gauge then domestic growth will follow as the economy is heavily dependent on export demand. The USDCHF ran into resistance this week at 1.0499-38.2% Fibo of 1.0886-1.0179 and with a break below the 20-Day SMA, we may see continued Franc strength. Support could come at 1.0283-9/30 low, but a break there exposes the yearly low of 1.0184. -JR
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