Focus On Very Important CHF Economic Calendar Events - 1st Week Of 2015

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Includes: FXF
by: FX Analyst

Summary

Light week with 1 important event only.

UBS Consumption Indicator is the highlight of the week.

Overall bearish on the CHF.

This would be the start a new series of weekly articles informing investors about the upcoming events on the economic calendar for the major currencies. In this article, I would bring my focus to the currency of the Swiss Franc (CHF). This article is meant to be a short and sharp article that would inform readers what events to look out for in the following week and why they are important.

I would categorize these events into 'Very Important', 'Important' and 'Marginal' and would include a brief analysis of the past results for the very important data. For a detailed analysis of the currency, please refer to my other articles as it is not the focus of this article. The very important events are likely to have a high impact on the currency, hence they are scrutinized. For the important events, the impact is lesser unless there is a surprise or the magnitude of change is much greater or lesser than expected. For the marginal events, it is not expected to move the currency much and a glance at it will do.

Overview of CHF Events

The first week of 2015 will be a light week for the CHF. There will be no very important events which is the focus of this series of weekly articles so there will be no detailed write-up on them. There will also be no marginal events, but we will have 1 important event as seen below.

Important Events To the CHF

Number

Event

Date of Event

Time of Event (GMT)

1

UBS Consumption Indicator

29.Dec.2014

07:00AM

As the name suggests, this indicator is released by UBS AG. This consumer based economic indicator is a composite index of consumer confidence, consumer spending, tourism, new car sales and retail activity, and it is released on a monthly basis. For October 2014, the reading came in at 1.29 which is lesser than the revised reading of 1.39 (revised lower from 1.41) for September 2014.

Overview of the Strength of CHF

We can see from the CurrencyShares Swiss Franc Trust ETF (NYSEARCA:FXF) chart below to gauge the strength of the CHF. The FXF tracks the performance of the CHF net of expenses of 0.41% and it is listed on the New York Stock Exchange in United States Dollars. The FXE is liquid with $187.66 million of market capitalization and last daily transaction volume of 14,307. This volume is reduced due to the Christmas and New Year holiday effect, and volume is expected to improve by the second week of 2015.

In order to defend the CHF 1.20 floor to the euro, the Swiss National Bank (SNB) reduced its deposit rates to negative 0.25%. It is successful in keeping the value of the CHF down when international funds, especially those from Europe, are keen to seek refuge in its safe haven status. The negative interest rates that the SNB charge its banks will be passed on to the bank's client eventually which acts as a dampener of capital flows. Hence, we are seeing a bearish tone in the FXF and this is likely to continue for some time to come.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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