CHF Currency Report | Nov 19 2020

Since the beginning of the week (11/16), the Swissie (CHF) has been trending downward against the US dollar, depreciating 0.105% to $1.0949/USD. Given that CHF is typically considered a safe haven currency and performs well when there is a risk-off sentiment. Therefore, such a depreciation can be attributed to a multitude of factors such as Pfizer and Moderna announcing effective coronavirus vaccines with efficacy rates of 94% and 95%.

However, positive economic data has softened the impact of this vaccine news:

· Balance of Trade for the month of October (CHF 2.9B) increased from September (CHF2.4B),

· Industrial Production YOY Q3 at -5.1% improved from -9.3% in Q2

· Unemployment rate stayed the same for October 3.2%

Since August, the CHF/USD pair has been trapped on a monthly basis between a resistance and support range of 1.11 and 1.077 respectively, as seen in the spot chat below.

Assuming the USD/CHF fails to breach the resistance level of 1.11, traders may see a bearish direction in the week to come back towards the lower support level of 1.077. This is positive news for Switzerland’s large export business.

Comments from SNB

After appreciating considerably during 2020, the Swissie continues to face contractionary measures implemented by the central bank. The Swiss National Bank (SNB) has spent US$97 billion since March 2020 to control the currency’s appreciation. Fritz Zurbruegg, SNB vice-chairman, announced on 18th November that the institution will continue this spending by increasing its foreign currency holdings to prevent any additional rise.

Upcoming events likely to influence the CHF are:

· Switzerland’s Economic Sentiment Index (due 25 NOV);

· Retail sales YoY for October (due 30 NOV); and

· KOF Leading Indicators (due 30 NOV).