Swiss franc pushing towards 90

The Swiss franc has started the trading week with considerable gains. USD/CHF is currently trading at 0.8966, up 0.64% on the day. The pair is trading at its highest level since the first week in December.

Retail Sales climb 

Swiss Retail Sales ended the year 2020 on a bright note, with a strong gain of 4.7 per cent. This was a strong improvement from the previous release of 1.7% and crushed the estimate of 1.5 per cent. Despite the economic downturn due to Covid-19, Swiss retail trade actually rose slightly in 2020, with a gain of 0.8% in real terms. There was more positive news from the manufacturing front, as January’s Manufacturing PMI accelerated to 59.4, up from 58.0 beforehand. This marked the strongest reading since September 2018, as manufacturing has rebounded from the contraction seen in H1 of 2020.

There are high hopes that 2021 will see a rebound in growth, which could boost the Swiss economy, which relies heavily on exports. The economy tends to expand at an annual clip of 1.7%, but the government’s chief economist says that the economy could grow by 3.0% this year or as much as 4.0% in the “positive scenario”.

KOF Economic Barometer falls below 100

The KoF Economic Barometer, a key indicator of business confidence, has started the new year with a soft release. The index fell to 96.5 in January, down sharply from 104.3 in the previous release. The soft reading caught the markets by surprise, as the consensus estimate stood at 102.2. The KOF barometer has dropped below its long-term average of 100 for the first time since July. The sharp decline can be attributed to a resurgence in Covid-19, which has hampered economic activity. Still, the Swiss franc shrugged off the weak reading as investors remain confident in the Swiss economy.

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USD/CHF Technical

• The first line of support is 0.8866. Below, there is support at 0.8821
• USD/CHF is testing resistance at 0.8963. This is followed by resistance at 0.9008. Close by, we have the 100- day moving average (MA) at 0.9019

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