US:
- The Fed left interest rates unchanged as expected at the last meeting.
- The macroeconomic projections were revised higher, and the Dot Plot showed that the FOMC still expects another rate hike by the end of the year with less rate cuts projected in 2024.
- Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully.
- The US CPI beat expectations on the headline figures, but the core measures came in line with forecasts and the market’s pricing barely changed.
- The labour market remains pretty resilient as seen once again last week with the beat inJobless Claims, although continuing claims missed for a second time in a row.
- The US Retail Sales last week beat expectations by a big margin with positive revisions to the prior figures, suggesting the consumers’ spending is still solid.
- Yesterday’s US PMIs showed that the economy now looks more balanced and resilient.
- Fed Chair Powelland other FOMC members continue to highlight the rise in long term yields as doing the job for the Fed and therefore they are expected to keep rates steady in November as well.
- The market doesn’t expect the Fed to hike anymore.
Switzerland:
- 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 latest Switzerland CPI showed again that 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 saw a notable bounce back although it remains in contraction, while the Services PMI remain in expansion.
- The market expects the SNB to keep rates steady at the next meeting as well.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that the USDCHF pair broke through the key support around the 0.90 handle where we had also the 50% Fibonacci retracement level and the trendline for confluence. The sellers extended the drop into the 0.89 handle where the price bounced. The trend now is bearish as the price has been printing lower lows and lower highs and the moving averages have crossed to the downside. The target should be the swing low around the 0.8746 level.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that the price has been diverging with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the price pulled back into the downward trendline but got rejected. The sellers should step in around the trendline to position for another drop into new lows, while the buyers will want to see the price continuing higher to target the 0.90 resistance where we can find also the 38.2% Fibonacci retracement level for confluence.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see that we had another divergence with the MACD that signalled an imminent pullback. The price couldn’t break above the 0.8952 level as the sellers stepped in around the trendline to fade the rally. The buyers will want to see the price breaking above the 0.8952 level to confirm the rally into the 0.90 resistance, while the sellers should increase their bearish bets if the price falls below the trendline again.
Upcoming Events
Tomorrow we will see the latest US Jobless Claims data with the market likely focusing on the Continuing Claims figures as they’ve missed expectations two times in a row already and might be a signal that the labour market is weakening. On Friday, we will get the US PCE report which is unlikely to change anything for the Fed at this point in time.