2016-08-02 12:28:34

According to today’s data, the real volume of retail trade in Switzerland fell by 3.9% on annual basis in July. This index, which estimates the total volume of retail sales, is considered an indicator of consumer confidence and reflects the state of the retail sector in the short term. The decline in the index usually has a negative impact on the franc. However, now, the franc is rising against the USD.

The pair USD/CHF has been declining for the fifth consecutive session. The USD is going down in the market.

The data released last Friday showed that US GDP has grown in Q2 by 1.2%, with the seasonal adjustment, that is much lower than the forecast (+2.6 percent). Average annual GDP growth in the USA has been at the lowest level since at least 1949.

Lower GDP growth in Q2 contributed to the decline in investors ' expectations of the interest rate increase in the near future. Weak US data on GDP, ISM index of business activity in the manufacturing sector and acceleration of inflation in the country for July, has caused the decline in the USD in the market. The dollar index WSJ, which reflects the value of the USD against a basket of 16 currencies, fell by 0.05% to 86.74.

Market participants are waiting for the Friday's data on the US labor market for July in order to understand if the U.S. economy is strong, to enable the US Fed to raise interest rate in the next few months. It is expected that the number of new jobs in July will increase up to 175 000; unemployment rate will remain unchanged at the level of 4.9%. This will be a good result if the forecast proves to be correct. However, if data turns out to be below the forecast, the USD will significantly weaken in the market, as expectations for rate hike in the USA will eventually decline. It is likely that the interest rate may be increased by 0.25% in December. President of the New York Fed, Mr. William Dudley said yesterday the decision to raise interest rate in the United States should be considered very carefully.

Although current deposit rate in Switzerland is negative, at the level of -0.75% and the franc has lost the status of safe haven currency because of the actions taken by Swiss National Bank in the foreign exchange market, the franc is in demand among investors.

USD/CHF: Weak US macro-economic statistics has weakened the USD.  Fundamental analysis for 02/08/2016