It is difficult to say about the probability of the «abenomics» session for the Swiss franc - 20.1.2014

As we expected in the previous report, the dollar index (USDIDX) kept its growing trend. On Friday, it set a new high for the last two months. This was adue to a good statistics. Increase in the index of industrial production in the U.S. for December exceeded forecasts. In general, it increased by 6.8% for the fourth quarter. This significantly greater than it was expected earlier (growth of 3.9%). Now investors believe that the positive tendencies for American industry will continue in 2014. The head of the Fed regional branch in Richmond stated in favor of further reductions program of purchasing government bonds. It also provided support to the U.S. dollar. Today, there is the day off in the U.S. due to the holiday - Martin Luther King's Day. This week's most important economic data will be released in the U.S. on Thursday.

In line with our expectations, the Japanese yen (USDJPY) moved to a neutral trend for now. It has weakened by 8.2% (an increase in the graph) for three months. Probably market participants have decided to take a break and see how the national currency rate influence the Japanese economy. The weak data on industrial production in November came out today. However, the Forex market has responded with a slight increase in the yen on the chart. We believe that Japan's trade balance data for December can clarify the situation. They come out on January 27.

The Swiss Franc (USDCHF) weakened by 2.5% (an increase in the chart). Now, a number of economists believe that this trend will continue to reach 0.98 francs per dollar by the year-end . According to them, previously in the period (2007-2012) the Swiss Franc and Japanese Yen strongly strengthened due to low rates and carry trade policies. Later, the yen has fallen sagnificantly against the dollar (an increase in the chart) and reached more than adequate level due to the redemption of government bonds by the Bank of Japan. Thus the Japanese agovernment have struggled with possible deflation. The “Abenomics” term arose by the name of Japanese Prime Minister Shinzo Abe. It is difficult to say about the probability of the «abenomics» session for the Swiss franc. However, it should be noted that due to the actions of the Bank of Japan, the weakening of the yen against the U.S. dollar in 16 months was about 36%. During the same time, the Swiss franc, in contrast, rose by 2%. Meanwhile, there is a risk of deflation or Swiss economy. Theoretically, this may require a change in the monetary policy of the Swiss National Bank. However , its next meeting is to be held not sooner than March 20. In the meantime, we will track other events relating to the Swiss franc. The next important economic data is expected on January 30 (KOF indicator ) .

The Australian Dollar (AUDUSD) was on a slight correction after the strong attenuation. This was facilitated by the data on growth in the Chinese economy by 7.7% for the last year. Note that the increase in Chinese GDP for October-December was 1.8% less than the preliminary forecasts. This limited the strengthening of Aussie. On Wednesday, this week ,we expect the macroeconomic data on inflation in Australia that could affect its national curency rate.

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