US dollar traded higher against the Swiss franc on Tuesday, as speculation appeared that US lawmakers will reach an agreement on raising the nation’s debt ceiling and avert a default, which caused safe haven currencies, such as the franc, to lose their appeal.
USD/CHF touched a session high at 0.9064 at 8:20 GMT, after which consolidation followed at 0.9058, rising 0.34% on a daily basis. Support was to be found at October 4th low, 0.8978, while resistance was to be encountered at September 27th high, 0.9111.
According to an official report, the annual index of consumer prices in Switzerland showed a slight retreat in September, meeting forecasts. Consumer prices decreased 0.1% in September on annual basis, after they remained flat a month ago. Swiss National Bank (SNB) had predicted that the index of consumer prices will fall 0.2% during 2013 and will gain 0.3% in 2014. The monthly performance of the index showed a 0.3% increase in September, following the 0.1% dip in August, while preliminary estimates pointed a lesser rate of increase, 0.2%.
Separately, Swiss retail sales recorded a 2.4% gain in August on annual basis, exceeding preliminary estimates of a 1.7% increase, after Julys result has been revised down to a 0.6% gain from a 0.8% gain previously.
The rate of unemployment in the country, on the other hand, remained stable at 3.2% in August in line with expectations, according to seasonally adjusted data.
Meanwhile, US Senate Democrats are planning to conduct a test vote before the end of this week on a measure that would grant President Barack Obama authority to increase the 16.7 trillion USD debt ceiling, probably for one year, unless two-thirds of both chambers of Congress disapprove, Bloomberg reported. Such a plan emerged as Gene Sperling, the director of Obama’s National Economic Council, suggested another route toward a temporary resolution to the budget mater. He declined to rule out a short debt-limit extension, but also reiterated that the administration preferred a longer-term resolution.
In addition, Federal Reserve Bank President for Dallas, Richard Fisher said on Monday that the United States “cannot afford to default” and that debt ceiling talks “will come down to the wire.” Default was “unthinkable,” and “no one will ever trust us again,” Fisher, who does not vote on Fed’s monetary policy this year, said in Dallas.
Elsewhere, the Swiss franc was lower against the euro, with EUR/CHF cross gaining 0.20% for the day to trade at 1.2289 at 12:48 GMT. It became clear that German factory orders decreased unexpectedly in August, after international orders registered a formidable drop. The Ministry of Economy in the country said, however, that the already gained momentum was still present, as domestic demand for means of production remained strong. Germanys factory orders marked their second monthly drop in August, falling below the initial estimates. Orders fell 0.3% on a monthly basis, extending the decline, recorded in July, 1.9%, as the latter has been revised up from a 2.7% drop previously. Despite these non-optimistic figures, experts from the Ministry suggested that the positive tendency for the indicator remained intact.
Last but not least, GBP/CHF pair was rising 0.30% to trade at 1.4580 at 13:00 GMT.
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