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Forex - USD/CHF edges higher, upside seen limited

Published 12/05/2012, 05:05 AM
Updated 12/05/2012, 05:06 AM
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EUR/CHF
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Investing.com - The U.S. dollar edged higher against the Swiss franc on Wednesday, as concerns over U.S. fiscal policy continued to linger, although new hopes for progress in takcling the sovereign debt crisis in the euro zone continued to support market sentiment.

USD/CHF hit 0.9275 during European morning trade, the session high; the pair subsequently consolidated at 0.9277, edging up 0.11%.

The pair was likely to find support at 0.9241, the low of December 3 and resistance at 0.9304, the high of November 29.

Investors continued to watch negotiations between Democrats and Republicans to avoid the U.S. fiscal cliff, a set of spending cuts and tax increases due to come into effect on January 1 if lawmakers cannot reach an agreement on reducing the budget deficit.

Earlier in the week, the White House dismissed a proposal from congressional Republicans that included tax reforms and spending cuts, saying it did not meet President Barack Obama's pledge to raise taxes on the wealthiest Americans.

But market sentiment remained supported after Greece launched a scheme to buy back debt from private investors on Monday, as part of an agreement to reduce its debt load and unlock a new bailout package worth EUR44 billion.

In addition, Spanish and Italian bond yields turned lower after Spain formally requested aid to recapitalize its banks.

The Swissie was lower against the euro with EUR/CHF adding 0.11%, to hit 1.2145.

Also Wednesday, official data showed that retail sales in the euro zone dropped by 1.2% in October, far more than the expected 0.1% decline, after a 0.6% fall the previous month.

Later in the day, the U.S. was to release a report on ADP nonfarm payrolls, as well as official data on factory orders and crude oil stockpiles. In addition, the Institute of Supply Management was to produce a report on service sector activity.


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