Fundamental
Overview
The US Dollar came under
renewed pressure recently following the surprisingly weak US
consumer confidence report on Tuesday. The labour market data in the report
softened a lot and it generally leads the unemployment rate.
The market responded by
raising the probabilities for the Fed to cut by 50 bps in November to roughly
60%. The question now is whether this is just about the low hiring rate or
something worse. We will have to wait for the NFP report next Friday.
The focus is now on the
economic data. If we start to see an improvement, then Treasury yields will likely
rise and drive USDCHF higher. Conversely, if the data weakens significantly,
the market will start to worry about a recession and take USDCHF lower.
For the CHF, the SNB
today cut rates by 25 bps bringing the policy rate to 1.00%. The central
bank mentioned that it’s prepared to intervene in currency markets as necessary
and the new inflation forecasts were revised significantly lower signalling
more rate cuts to follow.
That was not enough for the
market to lead to a weaker CHF as the currency is now positive on the day.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF Daily
On the daily chart, we can
see that USDCHF remains stuck in the range between the 0.8555 resistance
and the 0.8400 support. The market participants will likely keep on playing the
range by buying at support and selling at resistance until we get a breakout.
USDCHF Technical
Analysis – 4 hour Timeframe
USDCHF 4 hour
On the 4 hour chart, we can
see more clearly the rangebound price action. There’s not much to add here as
we will need to wait for a major catalyst or a breakout to see a more sustained
trend.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, we can
see that the pair bounced strongly from the lows yesterday. If the price breaks
below the most recent higher low at 0.8465, we might see the bearish momentum
increasing as the sellers will look for a drop back into the support. The red
lines define the average daily range for today.
Upcoming
Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude
the week with the US PCE report.