Fundamental
Overview
The USD performance has
been mixed in the past days but still on net negative despite the decreasing
December rate cut odds. It looks like the stock market is what has been driving
all other markets.
In fact, when the stock
market had positive days, we’ve seen Treasury yields and the US dollar rising,
but when stocks performed poorly, Treasury yields and the greenback gave back
the gains. The market might be thinking that a selloff in the stock market is
going to weigh significantly on the economy, eventually requiring the Fed to
cut more or more aggressively.
The focus now is of course
on the Fed and the US data ahead of the December FOMC meeting. The market
pricing is now showing just a 42% chance of a cut in December, so the data will
have the final say.
I don’t think the September
NFP on Thursday is going to matter much if it’s soft given that it’s old data,
but a strong report might be taken as meaningful because the market could think
that conditions were already getting better in September before the two rate
cuts.
Therefore, I think the
November NFP is going to have the final say, which will hopefully get released
just before the FOMC meeting in December (we won’t get the November CPI in
time).
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, and Chairman Shlegel recently said that he expects inflation to
rise slightly in the next quarters.
USDCHF
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDCHF dropped all the way back to the 0.7882 level. The buyers
stepped in there with a defined risk below the level to position for a rally
back into the 0.8073 level. The sellers, on the other hand, will want to see
the price breaking lower to increase the bearish bets into new lows.
USDCHF Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a minor resistance zone around the 0.7980 level. That’s where
we can expect the sellers to step in with a defined risk above the resistance
to position for a drop back into the lows. The buyers, on the other hand, will
look for a break higher to increase the bullish bets into the 0.8073 level.
USDCHF Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a minor support zone around the 0.7925 level. If we get a
pullback, we can expect the buyers to step in there with a defined risk below
the support to position for a rally into new highs. The sellers, on the other
hand, will look for a break lower to increase the bearish bets into the 0.7872
level next. Tomorrow, we have the FOMC meeting
minutes. On Thursday, we get the September NFP report and maybe the US Jobless
Claims data
