After a few days of coasting, the Swiss franc has sprung into action on Friday, posting considerable gains against the sagging U.S. dollar. In the European session, USD/CHF is trading at 0.9030, down 0.67% on the day.
Swiss KOF Economic Barometer Rises Sharply
The KOF Economic Barometer was up sharply in August, which lent support to strong gains for the Swissie on Friday. The indicator is comprised of some 219 indicators, including banking confidence, stock market prices and consumer confidence. The barometer jumped to 110.2 in August, up from 85.7 beforehand. As well, it easily beat the forecast of 90.3. The KOF barometer has now accelerated significantly in each of the past three months. This is pointing to a V-shaped recovery for the Swiss economy, which would mean that the economy is heading in the right direction.
Swiss GDP Decline Less Severe Than Expected
Second-quarter GDP has been a spooky word for investors and traders, as major economies have posted sharp declines. Switzerland’s economy slipped by 8.2% in Q2, which follows a decline of 2.6% in the first quarter. Although the Q2 drop was the largest since records started to be kept in 1980, the decline was mild compared to many countries – in the United States, for example, GDP plunged by a staggering 31.7%. Investors were unfazed about the GDP reading, as USD/CHF was almost unchanged on Thursday.
USD/CHF Technical
- 0.9131 is the next resistance line. Above, there is resistance at 0.9171.
- USD/CHF broke below support at 0.9044 in the Asian session, the first support level. This is followed by support at 0.8997, just below the symbolic 0.9000 level.
- In the Asian session, USD/CHF has broken below the 10-day MA line. This is a bearish signal for the pair.