ZURICH: The Swiss franc inched lower against the euro and the dollar on Monday, with many analysts thinking the greenback is in for a rebound against major currencies after several weeks of losses.
The euro has been steadily gaining ground on the dollar for over seven weeks but is now nearing the top of a trading range that has lasted since late 2011, and will be tough to crack. The fact that market participants have trimmed long positions on the dollar is also helping the US currency.
"We think the recovery in the euro zone will continue but we have a more optimistic scenario for the US economy, which means the dollar-franc rate could near parity again in the coming months," said Sven Schubert, forex strategist at Vontobel.
The dollar came under pressure last week after sales of new US homes fell to their lowest in nine months, adding to uncertainty about when the Fed might start tempering its stimulus and dragging 10-year Treasury yields lower.
Much of the market still thinks the Fed will begin tapering in September, but a lot will depend on the August payrolls report due on Sept. 6. Analysts suspect it would take a very weak reading to push back the start date.
On the Swiss macro front, data releases scheduled this week include the UBS consumption indicator on Wednesday and the KOF barometer on Friday. Analysts polled by Reuters expect the KOF to rise to 1.33 points in August from 1.23 points in July.
"The leading indicators have been quite strong recently, we wouldn't be surprised if they came down a bit. The purchasing managers' index (due Sept 2) is probably more important than the KOF this week," Schubert said.
"We believe the Swiss franc will continue to trade in a tight range against the euro," Schubert said.
The franc fell 0.1 percent against the dollar to trade at 0.9224 by 0647 GMT compared to the New York close.
The franc fell 0.1 percent against the euro to trade at 1.2343 per euro.
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