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Forex - USD/CHF weekly outlook: May 16-20

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Forex Pros - Last week saw the Swiss franc decline against the broadly stronger U.S. dollar after weaker-than-expected inflation data dampened expectations that the Swiss National Bank would raise interest rates in the near future.

USD/CHF hit 0.8946 on Friday, the pair's highest since April 20; the pair subsequently consolidated at 0.8924 by close of trade, gaining 1.5% over the week.

The pair is likely to find support at 0.8782, last Wednesday's low and resistance at 0.9010, the high of April 20.

Data on Tuesday showed that Swiss consumer price inflation was softer-than-expected in April as the strong Swiss franc helped keep prices in check.

Consumer prices rose 0.3% year-on-year and were 0.1% higher compared with the previous month, but came in far short of expectations for a 0.7% year-on-year rise.

The slight increase in prices in April was due to higher prices for new clothes and shoe collections and oil products, while lower food prices helped to dampen the rise.

Also Tuesday, Switzerland's consumer sentiment index dropped to -1 in the second quarter, from 10 points in the first quarter. This was largely due to households turning more negative about their savings outlook.

Meanwhile, the weeks steep slide in commodities, oil and other high-yielding assets saw the dollar strengthen broadly as traders sought safe harbor from volatile markets.

Looking ahead to next week, the U.S. is to publish government data on housing and employment while the Federal Reserve is to publish the minutes of its most recent policy meeting.

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

Monday, May 16

Federal Reserve Chairman Ben Bernanke is to speak; his comments will be closely watched for any clues to the possible future direction of monetary policy. The U.S. is also to publish government data on the balance of domestic and foreign investment as well as data on manufacturing activity in New York state.

Tuesday, May 17

The U.S. is to publish official data on building permits, an excellent gauge of future construction activity as well as data on housing starts, a leading indicator of economic health. The country is also to publish government reports on the capacity utilization rate and industrial production.

Wednesday, May 18

The Federal Reserve is to publish the minutes of its most recent policy meeting. The minutes give in-depth insights into the economic conditions that influenced the decision on where to set interest rates. The U.S. is also to publish government data on crude oil stockpiles.

Thursday, May 19

The ZEW Centre for Economic Research is to publish a report on Swiss economic expectations, a leading indicator of economic health.

The U.S. is to publish its weekly report on initial jobless claims as well as industry data on existing home sales and official data on manufacturing activity in Philadelphia.

Friday, May 20

SNB governing board member Jean-Pierre Danthine is to speak; his comments will be closely watched for any clues to the possible future direction of monetary policy.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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