Dollar direction key

For the dollar/Swiss rate, the overall trend of the U.S. dollar will likely be the driving force between now and yearend.

If the U.S. dollar can re-establish the strengthening trend seen during the first half of 2005, the potential exists for the dollar/Swiss to push through the $1.30 barrier.

However, if bearish dollar factors emerge, such as concerns the U.S. Federal Reserve could slow its rate-increase cycle post-Katrina, the dollar/Swiss rate will retreat again.

BNP’s Fink sees additional gains in the dollar/Swiss between now and year-end.

“We are looking for the dollar to stay supported across the board until year-end,” she says. She targeted $1.34 as an upside objective.

Looking at market action as of mid-September, Thomson Financial’s Rogers said he was positive on the outlook for the U.S. dollar and negative on the Swiss franc. While dollar/ Swiss had retreated to the $1.22 area in early September, Rogers called for dollar/Swiss gains toward $1.32/1.33 “on the next rally.”

“Right now, Switzerland has one of the lowest interest rates in the world,” he explains. “It doesn’t make you want to buy the Swiss franc in any meaningful way.”