USD
- The Fed left interest rates unchanged as expected with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The US CPI report yesterday missed expectations across the board sparking a strong dovish repricing and USD weakness.
- The labour market is starting to show some weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board.
- The US Consumer Confidence and University of Michigan Consumer Sentiment continue to fall.
- The recent US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
- The recent Fedspeak has been leaning on the hawkish side, but the US CPI data yesterday was basically a declaration that the Fed is definitely done.
- The market doesn’t expect the Fed to hike anymore.
CHF
- The SNB kept interest rates steady at 1.75% vs. 2.00% expected as the central bank sees the significant tightening in recent quarters countering the remaining inflationary pressures.
- The SNB Governor Jordan said that “the central bank will not hesitate to tighten monetary policy further if necessary”, but the conditions at the moment do not call for further tightening at all.
- The Switzerland CPI ticked higher recently but the inflation rate is comfortably in the SNB’s 0-2% target band for both the headline and core measures.
- The Unemployment Rate matched the previous reading hovering at cycle lows.
- The Manufacturing PMI missed expectations and fell further into contraction, while the Services PMI remain in expansion.
- The market doesn’t expect the SNB to hike anymore.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF yesterday plummeted following the miss in the US CPI report. The price is now at the 0.8886 low where we can expect some buyers stepping in to position for a rally back into the highs. The sellers, on the other hand, will want to see the price continuing lower to increase the bearish bets into the next support at 0.8750.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that from a risk management perspective, the sellers will be better off waiting for the price to pull back into the swing low level at 0.8950 where we can also find the 38.2% Fibonacci retracement level for confluence. That spot would give the sellers a better risk to reward setup. Alternatively, the price might even push all the way up to the downward trendline where the sellers will have another opportunity to position for a drop into new lows.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see more closely the current price action around the 0.8886 low where the buyers are likely to pile in to position for a rally. The first target should be the 0.8950 resistance and upon a break to the upside, the trendline around the 0.90 handle. If the price continues lower and breaks the 0.8877 level, we can expect the sellers to increase the bearish bets but the risk to reward will be much worse.
Upcoming Events
Today, we have the US Retail Sales and PPI data with the market likely giving more importance to the Retail Sales data. Tomorrow, we will see the latest US Jobless Claims figures where the market will want to see how fast the labour market is softening.
