Forex Market: USD/CHF daily trading forecast

Friday’s trade saw USD/CHF within the range of 0.9616-0.9700. The pair closed at 0.9641, losing 0.42% on a daily basis.

At 7:18 GMT today USD/CHF was down 0.03% for the day to trade at 0.9634, which is also the current daily low.

Fundamentals

United States

New York Empire States Manufacturing data

The New York Empire State Manufacturing Index probably improved to a reading of 12.00 in December, according to the median forecast by experts, from 10.16 in the prior month. If so, this would be the highest index reading since September, when the indicator was reported at 27.54.

The index is based on the monthly Empire State Manufacturing Survey, which is conducted by the Federal Reserve Bank of New York. About 200 top manufacturing executives respond to a questionnaire, sent out during the first day of the month. They provide their estimates in regard to the performance of several business indicators from the prior month, while also forecasting performance during the upcoming six months.

The ”general business conditions” component of the index is based on a distinct question, posed on the Empire State Manufacturing Survey, which means it is not a weighted average of the other indicators. These indicators, which are only applicable to the manufacturing facilities of survey respondents in the region of New York, include new orders, shipments, unfilled orders, delivery time, inventories, prices paid, prices received, number of employees including contract workers, average employee work week, technology spending and capital expenditures.

The general business conditions component and the sub-indexes for the 11 indicators are calculated by subtracting the percentage of respondents, rating an indicator as ”lower” (a drop), from the percentage of respondents, rating the same indicator as ”higher” (an increase). In case 33% of survey respondents stated that business conditions had improved during the current month, 50% stated that conditions had not changed, and 17% of the respondents stated that conditions had deteriorated, the index would have a reading of 16. Readings above 0.00 are indicative of improving business conditions in the region. Higher-than-anticipated index value would certainly boost demand for the US dollar. The Federal Reserve Bank of New York is expected to release the official reading at 13:30 GMT on Monday.

Industrial output, Capacity Utilization Rate

Industrial output in the United States probably expanded 0.6% in November compared to October, following a 0.1% contraction in October compared to September. Manufacturing production expanded 0.2% in October, as the production of non-durable goods increased 0.3%, while the production of durable goods edged up 0.1%. Mining output declined 0.9%, while utilities output shrank 0.7% during the same month.

The index of industrial production reflects the change in overall inflation-adjusted value of output in the three major sectors mentioned above. The index is sensitive to consumer demand and interest rates. As such, industrial production is an important tool for future GDP and economic performance forecasts. Those figures are also used to measure inflation by central banks as very high levels of industrial production may lead to uncontrolled levels of consumption and rapid inflation. It is a coincident indicator, which means that changes in its levels generally echo similar shifts in overall economic activity. A larger-than-projected increase in the index would usually boost demand for the US dollar.

The Board of Governors of the Federal Reserve is to release the production data at 14:15 GMT.

In addition, Capacity Utilization Rate in the country probably rose to 79.3% in November from 78.9 in October. If so, this would be the highest utilization rate since March. This indicator represents the optimal rate for a stable production process, or the highest possible level of production in an enterprise, in case it operates within a realistic work schedule and has sufficient raw materials and inventories at its disposal. High rates of capacity utilization usually lead to inflationary pressure. In general, higher-than-anticipated rates tend to be dollar positive.

NAHB Housing Market Index

The National Association of Home Builders (NAHB) Housing Market Index probably slipped to a reading of 57.0 in December, according to expectations, from 58.0 in November. The latter has been the highest index reading since September, when the indicator stood at 59.0. It is based on a monthly survey in regard to current home sales and expected sales in the coming six months. Values above the key level of 50.0 indicate that housing market conditions are good. Therefore, higher-than-projected readings would provide support to the greenback. The official data is scheduled for release at 15:00 GMT.

Switzerland

The index of producer and import prices in Switzerland probably declined 1.4% in November from a year ago, according to the median experts’ estimate. In October the index fell 1.1%. The index consists of two sub-indexes, the producer price index (PPI) and the index of import prices (IIP). The PPI refers to goods produced and sold domestically or exported by Swiss companies. Goods includes raw materials, starting materials, semi-finished and finished products. Prices of goods are measured at the first marketing step in the production of the good. The IIP has a similar structure to that of producer prices, reflecting the prices of imported goods (price before duty, VAT). The combined index of producer and import prices generally reflects changes in both indexes, by summing up their values.

The Swiss Federal Statistical Office is scheduled to release the official figures at 8:15 GMT. Higher-than-expected readings will certainly heighten the appeal of the Swiss franc.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.9652. In case USD/CHF manages to breach the first resistance level at 0.9689, it will probably continue up to test 0.9736. In case the second key resistance is broken, the pair will probably attempt to advance to 0.9773.

If USD/CHF manages to breach the first key support at 0.9605, it will probably continue to slide and test 0.9568. With this second key support broken, the movement to the downside will probably continue to 0.9521.

The mid-Pivot levels for Monday are as follows: M1 – 0.9545, M2 – 0.9587, M3 – 0.9629, M4 – 0.9671, M5 – 0.9713, M6 – 0.9755.

In weekly terms, the central pivot point is at 0.9692. The three key resistance levels are as follows: R1 – 0.9768, R2 – 0.9895, R3 – 0.9971. The three key support levels are: S1 – 0.9565, S2 – 0.9489, S3 – 0.9362.