The Swiss Franc gains against the Greenback on Friday after US Producer Price Index data falls short of estimates.

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• The Swiss Franc gains against the Greenback on Friday after US Producer Price Index data falls short of estimates.
• Overall PPI fell and core factory gate prices flatlined for three consecutive months.
• The data substantially increases the probabilities of interest rates falling in the US in the future.

The Swiss Franc (CHF) rises against the US Dollar (USD) on Friday after the release of factory-gate inflation in the form of the US Producer Price Index (PPI). The data shows wholesale price gains in December were lower than economists had estimated. This increases the probability interest rates in the US will fall earlier than had been expected. Since lower interest rates tend to attract less foreign capital inflows, the news is bearish for the US Dollar.

USD/CHF – the number of Swiss Francs (CHF) that one US Dollar (USD) can buy – declines on Friday, falling back into lockstep with the longer-term bear trend, Since the trend is likely to extend the move favors short-holders.

US Dollar vs Swiss Franc: 4-hour Chart

The current four-hour bar is painted red as the pair sells off after the release of the PPI data. A break below the January consolidation range lows at 0.8465 would add confirmatory technical evidence to the view the downtrend is resuming, and see prices likely fall back to the November lows at 0.8332.

It would take a break above the major trendline for the downmove at around 0.8600 to confirm a change in the short-term bear trend and more upside. But the next target after that would be the 200-four-hour Simple Moving Average (SMA) not much higher at circa 0.8630.

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