USD/CHF retreats during late US trade on Friday, nearing three-week lows

US dollar traded in proximity to lows unseen in three weeks against the Swiss franc during the late phase of US session on Friday, as safe haven demand for the greenback was pressured, because investorsoptimism increased following the release of German business climate data earlier in the day.

After having fallen to a session low at 0.9067 at 16:45 GMT, also the lowest point since November 1st, USD/CHF closed at 0.9070 on Friday, losing 0.64% for the day. Support was likely to be received at October 31st low, 0.8990, while resistance was to be encountered at November 22nd high, 0.9150.

Market players have been pleasantly surprised after a survey of 7 000 business entities in Germany by the Ifo institute on Friday showed that business climate in the country demonstrated a significant improvement in November, as sales prospects increased in all sectors of the economy. This report came as another evidence that economic recovery in Germany was picking up the pace during the last quarter of the year, and also implied that economic growth during next year may strengthen even further.

The index of business climate, reflecting companies’ expectations for business conditions in the next six months, climbed 1.9 points to reach a value of 109.3 in November, completely neutralizing the unexpected drop, recorded in October. Experts’ projections have also been exceeded, as they pointed a lesser advance, to 107.7 in November.

However, the US dollar received support against major peers on Thursday, after the Department of Labor said that the number of people who filed for unemployment assistance in the United States decreased by 21 000 to reach 323 000 during the week ending on November 16th 2013, or the lowest number since September. Expectations pointed that the number of claims will fall less, to 335 000.

In addition, greenbacks demand was boosted additionally after Markit Economics reported, that the index, gauging manufacturing activity in the United States, rose to a reading of 54.3 in November, according to preliminary data, marking an eight-month high. The final value of the manufacturing PMI came in at 51.8 in late October.

Meanwhile, according to Swiss National Bank (SNB) board member Fritz Zurbruegg, the bank will probably keep the cap on the Swiss franc, as global economic recovery remains sluggish.

“The minimum exchange rate will remain a necessary instrument for the foreseeable future,” the policymaker said at a reception of money-market traders in Geneva on Thursday, cited by Bloomberg News. “The monetary policy we have conducted to date will continue to apply without any restrictions.”

The central bank has imposed a cap of 1.20 per euro on the Swiss franc since September 2011, undescoring the risk of deflation and a recession.

Switzerlands Gross Domestic Product is currently 5% above its levels before the crisis. However, according to Fritz Zurbruegg, economic growth in the country has been driven by domestic consumption due to high immigration, while the annual GDP per capita has not yet managed to approach its pre-crisis levels.

The national currency was still 10% above its long-term average, in trade-weighted, inflation-adjusted terms, the policymaker said.

Elsewhere, EUR/CHF cross closed at 1.2296 on Friday, down 0.10% on a daily basis, after touching a session low at 1.2286. GBP/CHF pair closed the week at 1.4715, falling 0.50% for the day, after earlier touching a session low at 1.4697.