Forex - USD/CHF weekly outlook: July 9 - 13

Investing.com - The U.S. dollar surged to a one-and-a-half year high against the Swissie on Friday, as lowered expectations for a fresh round of easing by the Federal Reserve and sustained concerns over global economic growth boosted demand for the safe haven greenback.

USD/CHF hit 0.9793 on Friday, the pair’s highest since December 13, 2010; the pair subsequently consolidated at 0.9770 by close of trade on Friday, surging 3.05% over the week.

The pair is likely to find support at 0.9664, the low of May 31 and resistance at 0.9793, last Friday’s high.

The greenback rallied broadly after the U.S. Bureau of Labor Statistics said on Friday that the economy added 80,000 jobs in June, below market forecasts for a gain of around 90,000.

April figures were revised to 68,000 from 77,000 jobs, while May's numbers were revised to 77,000 from 69,000.

The report also showed that the U.S. unemployment rate held steady at 8.2% in June, in line with expectations.

Although the employment report was weaker than expected, many investors said it was not bad enough to spur the U.S. central bank to launch a third round of quantitative easing.

In Switzerland, official data showed on Friday that consumer price inflation fell 0.3% in June, in line with expectations.

Separately, the Swiss National Bank said that foreign currency reserves rose to CHF364.9 billion in June from CHF305.9 billion the previous month.

Meanwhile, market sentiment remained under pressure as a series of stimulus measures by world central banks added to global growth concerns.

On Thursday, European Central Bank President Mario Draghi said that the economic outlook faces downside risks, adding that indicators for the second quarter point to weakening growth in the euro zone.

Draghi refused to speculate, however, on the chances of a third round of Long Term Refinancing Operations, which provides cheap loans to European banks to encourage them to lend.

The comments came after the central bank cut its benchmark interest rate to a record low 0.75% in July, in a bid to bolster faltering growth in the region.

In addition, Bank of England policymakers voted to increase the stock of asset purchases financed by the issuance of central bank reserves by GBP50 billion to GBP375 billion, in order to shield the recession hit U.K. economy from the ongoing debt crisis in the euro zone.

Elsewhere, China surprised traders by cutting interest rates for the second time in less than a month on Thursday, signaling that growth is slowing more than Beijing expected.

In the week ahead, investors will be closely watching ECB President Draghi’s testimony before the European Parliament, on Monday, as well as a two-day meeting of euro zone finance ministers, amid expectations for a final agreement on aid for Spanish banks.

Markets will also be eyeing the minutes of the Fed’s latest policy meeting as well as U.S. data on trade balance and unemployment claims.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, July 9

Euro zone finance ministers are to meet in Brussels for a first day of talks.

Tuesday, July 10

Euro zone finance ministers are to hold a second day of talks in Brussels.

Wednesday, July 11

The U.S. is to release official data on trade balance and crude oil stockpiles, followed by the minutes of the Federal Reserve’s most recent policy-setting meeting. The minutes will be closely watched for signs of future monetary policy decisions by the central bank.

Thursday, July 12

The U.S. is to publish government data on unemployment claims and official data on import prices, followed by the monthly Treasury statement.

Friday, July 13

Switzerland is to release official data on producer price inflation, a leading indicator of consumer inflation.

The U.S. is to round up the week with government data on producer price inflation and a preliminary report by the University of Michigan on consumer sentiment.

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