Swiss franc advances as dollar pares gains

The Swiss franc is the top performing currency at noon in New York with an advance of nearly 0.30% against the greenback. Supporting the swissie’s advance was a stronger-than-expected print on the October trade balance report which posted a surplus of 2.15B, up from a previously upward revised print of 1.91B. Markets remain fixated on developments out of Europe and Washington with equity markets trading lower after a weaker-than-expected print on the 3Q GDP which missed estimates with an annual rate of just 2.0%. Consensus estimates were calling for a print of 2.5%. The data saw European stocks drift lower with US equities posting modest losses in North American trade.

The USD/CHF pair continues to soften after rebounding off the 100% Fibonacci extension taken from the September 15th and October 27th troughs at 0.9235 last week. Interim support rests at 0.9120 backed closely by trendline support and the 76.4% extension at 0.9077. A break below this level eyes subsequent floors at 0.9030 and the 61.8% extension at 0.8980. Note that due to the EUR/CHF peg from the Swiss National Bank, downside moves are likely to be limited unless the euro sees substantial advances to the topside. A break above soft resistance at 0.9150 eyes topside targets at 0.9180, trendline resistance, and the 100% extension at 0.9235.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.8511

50-Day SMA

0.8974

20-Day SMA

0.8964

2011 CHF High

0.7079

The Kiwi is the weakest performer with the NZD/USD off 0.28% in early US trade. The Reserve Bank of New Zealand cut its 4Q 2 year inflation forecast from 2.9% to 2.8%, its lowest read since the 1Q. The outlook lessens the chances that the RBNZ will look to raise rates as inflation expectations remain well rooted. The pair continues to hold above interim support at the 0.7450 level with stronger support seen lower at the 100% Fibonacci extension taken from the October 27th and November 13th crests at 0.7411. Topside resistance holds at the 0.75-figure with subsequent ceilings eyed at the 76.4% extension at 0.7530 and 0.7565. Medium-term outlook for the kiwi remains weighted to the downside as fears of increased exposure to the European crisis continue to see kiwi losses outpace those of the higher yielding aussie. We look to sell rallies with rebounds off our resistance targets.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.8147

50-Day SMA

0.7885

20-Day SMA

0.7844

2011 NZD High

0.8842

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
WEB:
www.DailyFX.com

About the Author
Michael Boutros

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
WEB: www.DailyFX.com

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