Fundamental
Overview
The USD has been weakening
across the board ever since Fed’s Williams endorsed a December rate cut. The
greenback then extended the losses further last week following soft ADP data
and a Bloomberg report saying that Hassett emerged as the frontrunner for the
Fed Chair position.
The probability for a
December cut is now at 92%, which makes it a done deal. We won’t get much data
before the FOMC meeting, so the focus will likely be mainly on jobless claims
and ADP data, which haven’t been showing any strong improvement.
Weak data should keep
weighing on the greenback, while strong data could provide some short-term reprieve.
At the end of the day though, it’s all about the FOMC decision now and the
following NFP and CPI reports.
On the CHF side, nothing
has changed. The SNB left interest rates steady and kept everything unchanged
at the last meeting. SNB’s members continue to repeat that the bar for negative
rates is high, so that leaves the Swiss Franc trading mostly based on risk
sentiment. We have the Swiss CPI report this week but given the above mentioned reasons, it’s not going to change anything for the SNB.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF daily
On the daily chart, we can
see that USDCHF reached the 0.81 handle again recently before pulling back as
the greenback lost ground amid dovish Fed bets. There’s not much we can glean
from this timeframe as the pair remains stuck in this wide range, so we need to
zoom in to see some more details.
USDCHF Technical
Analysis – 4 hour Timeframe
USDCHF 4 hour
On the 4 hour chart, we can
see that we have a downward trendline defining the current pullback. We can
expect the sellers to lean on the trendline with a defined risk above it to
keep targeting the 0.7980 support zone. The buyers, on the other hand, will
want to see the price breaking higher to pile in for a rally into the 0.8170
level next.
USDCHF Technical Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, we can
see that we have a minor support zone around the 0.8025 level where the price
got rejected from several times in the past few days. The buyers will likely
step in here with a defined risk below the support to target a pullback into
the trendline, while the sellers will look for a break lower to increase the
bearish bets into the 0.7980 support. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the US ISM Manufacturing PMI. On Wednesday, we have the Swiss
CPI, the US ADP and the US ISM Services PMI. On Thursday, we get the latest US
Jobless Claims figures. On Friday, we conclude the week with the University of
Michigan Consumer Sentiment report.
