Switzerland – Producer Price Index (PPI)
At GMT 8:15 a.m., the Swiss Federal Statistical Office released the month-over-month Producer Price Index (PPI) figure, which measures the changes in the price of goods and raw material sold by manufacturers in the country over the previous month.
Since the higher (or lower) cost at the manufacturer’s end are usually passed on to the wholesalers and ultimately the consumers pay the increased cost of production, this figure acts as an important leading indicator of the consumer inflation in the country. Hence, binary options traders pay close attention to this figure on a monthly basis.
During November, the Swiss PPI (m/m) decreased by 0.1% and the forecast for December was set at an increase of 0.2%. However, the actual figure indicated that the Swiss PPI has gone down by as much as 0.7% over the past month.
United Kingdom – CBI Industrial Order Expectations
At GMT 11:00 a.m., the Confederation of British Industry (CBI) released the monthly industrial order expectation index that measures the changes in the level of a diffusion index. CBI creates this index based on a survey of around 550 manufacturers in the United Kingdom.
Since businesses are the first to react to the changing economic climate in the country, any significant change in their industrial order expectations can indicate the future course of the economy. For example, a lower industrial order expectation may lead to lower rates of hiring and investment that may lead to lower consumer spending in the business cycle. Therefore, economists and participants in the binary options trading consider the CBI industrial order expectations index to be a leading indicator of the future economic climate in the United Kingdom.
During the last month, in November the CBI industrial order expectation index came out at 3 and the forecast for this month was also set at 3. However, the actual figure came out much higher compared to what the binary options market was expecting, at 5!
Trade Recommendation for the GBP/CHF
Since June 2014, the GBP/CHF has traded within an erratic price action. However, the unpredictable price action was mostly range bound and the price remained within the range, between 1.4975 and 1.5430.
Although the Swiss Franc is pegged to the Euro at 1.2 by the Swiss National Bank, it has been trading with a bearish momentum against the US Dollar.
The lower than the expected Swiss PPI this month is likely to depreciate the Swiss Franc (CHF) against the British pound as well. Moreover, better than expected CBI industrial order expectation index in the UK has increased by 2 points compared to the previous month. Such optimism in the UK’s industrial sector should provide ample bullish momentum in the pair as well.
In fact, since the GBP/CHF is trading at the lower half of the 1.4975-1.5430 range right now, at 1.5093, it is likely to bounce from this area as well. As long as the price of this pair remains above 1.4975, it would suggest a CALL in the GBP/CHF.
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About our Forex Analyst: Asif Imtiaz
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