Ending the week off lower, the Swissie major declined on dollar strength as Federal Reserve policy makers remained noncommittal on any further rate hike decisions in the near term. However, policy makers did make note that future decisions would remain dependant on upcoming economic data.
The notion has kept the Swissie under pressure during the week, as the currency pair has bounced off of the 1.2200 figure to rise above the 1.2300 after considerable consolidation in the middle. This weeks data will more than likely provide some bullishness for the underlying currency, albeit minimally as there is only two reports set for release. However, gains may very well be capped as the schedule remains chock full of US based economic data which will likely override even the most positive Swiss figures. Nonetheless, producer and import price figures are likely to fuel near term speculation of a continued tightening bias in the Swiss economy, in line with European central bankers. Already raising rates this past year, the Swiss National Bank continues to favor a hawkish bias as economic growth is evident in the region. Should prices maintain their annualized 3.1 percent boost, central bankers are likely to remain steadfast in their assessment and add to overall sentiment of another rate hike by year end. The notion seems to be growing as futures traders continue to price in another rate hike at least by the beginning of the fourth quarter.
For the week, data was relatively positive for the Swiss economy as the market was privy to two key reports on the region. Sparking off the schedule, traders saw unemployment remain consistent in the month of July from the 3.1 percent standing in June. However, the monthly reading was slightly higher than the consensus estimate, which pitted the rate to dip slightly to an even 3 percent. On a seasonally adjusted basis, the report remained unchanged at 3.3 percent on the month. Subsequently, the number of jobless claims in Switzerland dipped by 1,112 to 121,725, according to the State Secretariat for Economic Affairs. With unemployment at low levels, consumer sentiment reflected the surge in the economy supporting a Swiss consumer sentiment index reading that was the highest reading in five years. Boosted to a plus 12 point reading in the months, the survey jumped from the previous plus 7 point gauge seen in the month of April and reflected a consumer base that was more than comfortable with the current economic outlook. In addition, although less satisfied with personal budgets, households believed that income levels would increase in the next year. This sentiment is likely to spill over into further consumer demand and consumption, underpinning further expansion speculation in the longer term.
