The U.S.

Dollar

USD has been a floating currency since the early '70's. The United States dollar is controlled very strictly by the Federal Reserve Board. This is mostly accomplished by adjusting the lending interest rate for USD. USD is such a popular reserve currency that more dollars are held outside of the United States than within. But none of this is a guarantee that USD will remain the most powerful currency on the market. In 2007, Alan Greenspan said that it was possible the euro could at some point replace USD as the dominate currency on the market. Whether such a dramatic shift is probable in the post-housing bubble market remains to be seen.

The Swiss Franc

CHF is one of the most valuable currencies in the world. The Swiss economy has made this possible with its large holdings of gold (in an undisclosed location). Even more than its value, the stability of CHF is the major appeal to investors. A low national deficit and a low national unemployment rate significantly contribute to this stability. The Swiss Bank has official control over CHF value, but bank officers tend to allow the international trade market to determine it. It is easy to see why Switzerland has resisted pressure to convert to the euro, together with other EU member nations-especially in light of the poor economic fundamentals of other EU nations.

USDCHF Analysis

The USD/CHF pair is one of the most stable pairings. Naturally, this pair tends to correlate to EUR/USD, though CHF is generally more stable than the euro. Both economies have a significant financial sector, and therefore any changes in global financials have a significant influence, as investors flee to the stability of the dollar and franc. Depending on the status of the dollar, this pair is sometimes excellent for carry trades. This may be the best opportunity for profit on this pair in the future, if USD begins to inflate.

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Recent value of USD CHF Date July 27,2012 July 26,2012 July 25,2012 July 24,2012 July 23,2012 July 20,2012 July 19,2012 July 18,2012 July 17,2012 July 16,2012 July 13,2012 July 12,2012 July 11,2012 USD CHF Fr .9757 Fr .9775 Fr .9879 Fr .9956 Fr .9904 Fr .9877 Fr .9781 Fr .9793 Fr .9778 Fr .9783 Fr .9812 Fr .9845 Fr .9825

1. Fundamental Analysis USD/CHF was choppy throughout most of the week, as the pair moved up and closing at 0.9757.The upcoming week is very quiet, with only one scheduled release. Here is an outlook for the Swiss events, and an updated fundamental analysis for USD/CHF. Both US and Swiss releases failed to impress the markets this week. The US has run a string of weak releases, such as poor unemployment and manufacturing numbers, while the Swiss ZEW Economic Expectations is mired in deep negative territory, indicating weak confidence in the sluggish Swiss economy. Inflation Rate: The rate of inflation in United States, this often refers to the rate of inflation based on the consumer price index, or CPI for short. The American CPI shows the change in prices of a standard package of goods and services which American households purchase for consumption. In order to measure inflation, an assessment is made of how much the CPI has risen in percentage terms over a given period compared to the CPI in a preceding period. The Consumer Price Index for the United States of America is 229.478 for the month of June 2012. The inflation rate year over year is 1.664% (compared to 1.704% for the previous month). Inflation from May 2011 to June 2012 was -0.147%. . If prices have fallen this is called deflation (negative inflation). Most recent CPI Switzerland (inflation figure) -1.054 % that means the prices of goods and services goes down.

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The inflation rate goes down from (May 20 to June 5) & (June 30 to July 15), and from this time being the US Dollar appreciate against Swiss Franc. Interest Rates: The benchmark interest rate in the United States was last reported at 0.25 percent. Historically, from 1971 until 2012, the United States Interest Rate averaged 6.24 Percent reaching an all-time high of 20 Percent in March of 1980. In the United States, the authority for interest rate decisions is divided between the Board of Governors of the Federal Reserve (Board) and the Federal Open Market Committee (FOMC). The benchmark interest rate in Switzerland was last reported at 0.00 percent. Historically, from 2000 until 2012, Switzerland Interest Rate averaged 1.34 percent reaching an alltime high of 3.50 percent in June of 2000 and a record low of 0.0000 percent in August of 2011. In Switzerland, interest rates decisions are taken by the Swiss National Bank. The Swiss National Bank (SNB) will maintain the minimum exchange rate of CHF 1.20 per euro and will enforce it with the utmost determination. It remains prepared to buy foreign currency in unlimited quantities for this purpose. The interest rate on 3-month Swissdenominated deposits held in banks outside Switzerland. It serves as a valuable benchmark for determining interest rate differentials to help estimate exchange rates. Using a theoretical example on USD/CHF, the greater the interest rate differential in favor of the Eurodollar against the euroswiss deposit, the more likely USD/CHF is to rise. The Swiss franc has historically enjoyed an advantageous role as a "safe" asset due to: SNB independence in preserving monetary stability; secrecy of the nation's banking system; and the neutrality of Switzerland's political position. Moreover, the SNB's relatively hefty gold reserves had largely contributed to the franc's solidity Moreover US interest rate is higher than Swiss for a quit long time. It helps Swiss franc to appreciate against US Dollar.

Government Influence: Government gives the maximum independence to Swiss Central Bank in setting monetary and exchange rate policy. Unlike most Central banks, including Federal Reserve Board, the SNB does not use a specific money market rate to guide monetary conditions. Until fall 1999, the Bank used foreign exchange swaps and repurchase agreements as the main instruments to impact money supply and interest rates.

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Liquidity management has characteristically affected the Swiss franc due to the use of Foreign Exchange Swaps. If the Bank wishes to inject liquidity, it buys foreign currency (primarily dollars) against Swiss francs, thereby pressuring the currency. As of December 1999, the Bank shifted from a monetarist approach (targeting money supply) to an inflation-based approach namely; a 2.00% annual inflation rate. The Bank will use a range in the 3-month London Interbank Offer Rate (LIBOR) to stir monetary policy in order to achieve the 2.00% inflation target. By through this task, government try to control cross exchange quote against Swiss franc.

Market Expectation: The most important economic data items released in Switzerland are: M3 (broadest measure of money supply), CPI, unemployment, balance of payments, GDP and industrial production. USD/CHF is sometimes impacted by movements in cross exchange rates (non-dollar exchange rates), such as EUR/CHF or GBP/CHF. To illustrate: A rise in GBP/CHF that is triggered by an interest rate hike in the UK, could extend franc's weakness against other currencies, including the dollar. 3-month Euroswiss Futures Contract: The contract reflects markets expectations on 3-month euro swiss deposits into the future. The difference between futures contracts on the 3-month eurodollar and euroswiss eposits is an essential variable in determining USD/CHF expectations. Other factors: Due to the proximity of the Swiss economy to the Eurozone (specifically Germany), the Swiss franc has exhibited a considerably positive correlation with the euro. The relationship is most prominent in the highly negative correlation between USD/CHF and EUR/USD. To illustrate, a sudden move in EUR/USD (triggered by a major fundamental factor) is most likely to cause an equally sharp move in USD/CHF in the opposite direction. The relationship between these two currency pairs is one the strongest in currency markets.

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2. Technical Analysis

USD/CHF was choppy throughout most of the week, as the pair moved up and closing at 0.9775. The upcoming week is very quiet, with only one scheduled release. Here is an outlook for the Swiss events, and an updated technical analysis for USD/CHF. Both US and Swiss releases failed to impress the markets this week. The US has run a string of weak releases, such as poor unemployment and manufacturing numbers, while the Swiss ZEW Economic Expectations is mired in deep negative territory, indicating weak confidence in the sluggish Swiss economy. The Swiss franc appreciate against the U.S. dollar on Wednesday, after the first signs of deflation appeared at around 1:15 pm GMT, the USD CHF decrease .9956 to 0.9879 The Swiss currency was pulled back by unexpected price level data which showed deflationary pressures. According to the Federal Statistics Office, the Swiss producer and import prices fell in April by 0.2% compared to a month earlier and 0.4% compared to a year ago. The deflation data should probably persuade the Swiss central bank not to raise its interest rates on Thursday. In recent times, the Swiss economy posted very strong results. As a result, the Swiss franc rose to new heights against other currencies. The value of the franc was further supported by unstable recovery in the Eurozone and the United States. The Swiss
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economy is exports-oriented, however, and strong franc might cripple the Swiss economic growth. The Swiss central bank, therefore, will be reluctant to provide more steam to the Swiss currency. 3. Recommendation: After last weeks downturn, the European countries franc was the same against the money, as USD/CHF shut just shy of the 0.98 range, at 0.9757. The future weeks time has only two produces. Here is a perspective for the European countries activities, and a modified specialized research for USD/CHF. With the uncertainty continuous in the Euro-zone and a mix of information out of the US, the swishier handled to hold its against the dollar. The European countries forex was also reinforced by some latest produces, such as powerful store sales and a lower lack of employment rate. I am neutral on USD/CHF. Given the troubles in Europe and the global slowdown, many investors will be drawn to the safety of the US dollar. However, the US economy has been sputtering of late, and traditional safe haven currencies such as the Swiss franc could benefit from the bumpy US recovery. So there is very few probability to appreciate Swiss franc and it might goes down ton .97 Fr.

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