Last week, several Fed officials spoke in favor of continuing the policy of interest rate increase. Presidenbt of Fed Boston Eric Rosengren who has the right to vote in FOMC said that if economic data confirms improvements in the inflation situation and labor market, US Fed shall continue gradual completion of the incentive policy. Mr. Rosengren also said that financial markets underestimate the number of possible increases in interest rates by the US Fed.

The other long-time opponent of the soft policy, Fed President of Kansas City Mrs. Esther George has said last Thursday that the level of interest rates is too low. Given the improvement in the economy and the fact that inflation level is approaching the target level of 2%, she believes that keeping lows levels in the interest rates will be an adverse factor for the economy.

The other Fed representative and a member of FOMC, Fed president of Cleveland, Loretta Mester believes that inflation in the US is demonstrating long-awaited growth. She believes that weakness in inflation was caused by the decline in prices of energy and other commodities and by the rise in the USD.

Last week, American stock indices were declining. Financial markets demonstrate high anxiety in advance of the up-coming meeting of the US Fed in June and referendum of the UK membership in the EU .

US Department of commerce reported last Friday that retail sales in April rose by 1.3% against the previous month, which became the highest monthly rise since March 2015.

The USD is growing in the financial markets. While the US Fed continues to stick to the plan of gradual increase in the interest rates, the other Central Banks implement soft monetary policy.

President of Swiss National Bank Mr. Thomas Jordan, said at the beginning of this month that negative interest rates support national economy. He believes that Franc is significantly overvalued and Central Bank of Switzerland is ready to carry out interventions in order to weaken the national currency.

In this situation it is advisable to be careful when opening short positions on the pair USD/CHF. Long positions seem preferable.

USD/CHF: long positions are preferable. Fundamental analysis of 16.05.2016




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