Fundamental
Overview
The USD sold off across the
board on Friday following a softer than expected NFP report. Overall, the data wasn’t as bad as one
might think by just looking at the reaction but given that we were
positioned for a strong report and the pricing got more hawkish after the
Fed’s decision, the weaker data was enough to trigger a quick repricing.
In fact, the market at some
point was pricing 60 bps of easing by year-end compared to just 35 bps before
the NFP release. That’s a pretty quick change of heart. Over the weekend, we
also got Fed’s Williams opening the door for a cut in
September and Fed’s Daly on Monday echoed the same
sentiment.
The NFP clearly made them a bit more worried, and a September cut seems now a
done deal.
It’s highly likely that more
benign data will see Fed Chair Powell opening the door for a cut in September
at the Jackson Hole Symposium. Nonetheless, the ISM
Services PMI yesterday showed a new high in the prices index which could
keep traders on edge heading into the US CPI next week. Tomorrow, we get the US
Jobless Claims and good data might trigger a rethink on the actual softness of
the labour market.
On the CHF side, we haven’t
got anything new in terms of monetary policy as the SNB is now in a long pause.
The latest Swiss CPI showed a slight improvement in inflation although it’s not
important as the central bank will not hike rates for a long time. The market
doesn’t expect the SNB to cut anymore. There’s some focus at the moment on
the 35% tariffs that the US slapped on Switzerland. That is likely to be
resolved in the near future with the rate being set between 10-20% as we’ve
seen for most other countries.
USDCHF
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDCHF is trading above the key resistance
zone and the major trendline.
The buyers will likely continue to step in around these levels with a defined
risk below the recent lows to position for a rally into the 0.83 handle next. The
sellers, on the other hand, will look for a break lower to increase the bearish
bets into the 0.79 handle.
USDCHF Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that the price bounced from a minor upward trendline following the
NFP-induced selloff. The buyers will likely continue to lean on the trendline
to keep pushing into new highs, while the sellers will look for a break lower
to increase the bearish bets into new lows.
USDCHF Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the buyers will likely continue to pile in
around these levels to position for a rally into the 0.83 handle, while the sellers
will want to see the price falling below the key levels to increase the bearish
bets into new lows. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we get the latest US Jobless Claims
figures.
This article was written by Giuseppe Dellamotta at investinglive.com.