Continuing on last weeks dollar momentum, the USDCHF currency pair continued to advance higher during the week only to stop short at the 1.2750 figure. Throughout the week, bidders came in to take out the psychological barriers at 1.2600 and 1.2650. However, a major level of resistance, the 1.2750 looks to be a technical turning point for the market with sellers seemingly emerging. With dollar bearishness still presently underlying the markets, current momentum may be questionable from here on and lead to Swiss strength in the coming week.
Offering some suggestions of a pullback for the week is the handful of economic reports set for release. Scheduled for some time in the next six sessions, Swissie traders will be privy to producer and import prices for the month of September. Rising 0.4 percent in August, inflation at the wholesale level is expected to decline following a mild pullback in commodity prices for the month. Crude oil has since pulled back by 26 percent since hitting the record high of $78.40 with base metal weakness visibly evident. A sign that inflationary pressures may be abating, the report is likely to be taken very seriously, rather seen as a pullback of sorts, as the survey has climbed positively for most of the year so far. As a result, central bankers will likely continue to watch for inflationary pressures as the overall climate continues to be higher than the benchmark set by policy officials. Subsequently, the consensus estimates of a decline are set to pull the overall annualized figure lower to a 2.1 percent increase compared to the previous 3.1 percent tick higher. However, bullish proponents have not to fear as retail sales figures are likely to continue the uptrend seen over the past year. Previously rising by 2.1 percent, the adjusted retail report is expected to rise by 2.8 percent as consumer demand continues to churn forward on optimistic economic prospects, including supported export and manufacturing sectors. The growth in both sectors will subsequently feed into the trade balance numbers for the month of September. Already sporting a surplus, the trade balance should widen as exports continue to support manufacturing and industrial figures, pitting consensus figures at a total net positive 1.35 billion francs. The new figure would be an improvement from the 540 million surplus figure seen last month, boosting speculation that the Swiss National Bank will have to consider further rate hikes in curbing price increases.
