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Market Update: Firmer oil => Weaker stocks = Risk off
USDCHF: Whipsaw price action after the SNB rate decision
Swiss SNB Interest Rate Decision 0.00% vs. Exp. 0% (Prev. 0.00%); Willing to be active in the foreign exchange market as necessary to ensure appropriate monetary conditions (prev. “increased willingness”)Source: Newsquawk.com
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CHFJPY WEEKLY: Funding currencies
One look at this chart would strongly sugggest switching from JPY to CHF as a favored funding currency (e.g. for carry trades) is driving the cross lower.
While this has developed into a clear downtrend, it is not technicals driving the flows.
This would also explain divergence today, USDJPY down, USDCHF up.
Forex Market SnapshotL Mixed bag as mood turns risk off
- Mixed bag in a run for cover as mood turns risk off.
- AUD underperforming on risk off after failure to regain .7000
- GBPUSD weaker as EURGBP bounces back above .8500.
- ]EURUSD in a tight range, getting some support from EURGBP. but remains beloiw 1.1450\USDJPY remains trapped between 162-163, Trades bid above 162 but BoJ threat remains a deterrent on the upside.
- USDCHF outerforming,
- USDCAD remains defensive but pivotal 1.40 looms as an obstacle ahead of a 1.3950 target.
Light calendar todayt, focus on geopolitics and US equities
Forex Market Snapshot
Given how many opening week gaps have not followed through during this crisis, it should not be a surprise to see caution at yet another one to start this week.
This has seen opening week gaps filled in EURUSD, GBPUSD, AUDUSD and NZDUSD while the USDJPY gap remains open. There were no gaps seen in USDCAD and USDCHF.
This leaves the focus on news headlines with forex and other markets following the lead set by crude oul.
Forex Market Snapshot
With the weekend and month/quarter end approaching, traders have little choice but to play defense to guard against a headline news risk. This has seen US stocks slip, gold dip while crude oil up and the dollar holds firm.
- EURUSD: So far break9ng a 5-day trade around 1.16 (potentially bearish)
- USDJPY: Trading firm within 159-160 with conspiracy theorists saying BoJ likely lurking in attempt to [the top end being breached.
- GBPUSD: L:aging rather than leading and following the EUREUSD lead
- USDCAD: Joining in with a strong bid while above 1.38…faces key resistance at 1.3845 and 1.3928
- AUDUSD: NO longer an outperformer… on the defensive while below .7000… key support 6896
- USDCHF: Still paying notice to SNB intervention threat
USDCHF UPDATE
- CHF regaining its role as a safe haven, shrugging off SNB threats to intervene, which helped drag the USD down at week’s end despite the surge in oil prices (EURUSD followed with a lag as EURCHF fell as well).
- CHf bears watching to see if the market theme has shifted from the USD benefiting as a safe haven and/or an oil play.
- Watch .7775, the move below put bears in control targeting .7666 (.7600-30 below it).
- Back above .7775 would cool the risk
USDCHF 4 HOUR CHART
Forex Market Snapshot
- Just when it looked like stocks were set up for a clear path Santa Claus rally following the FOMC meeting, an Oracle earnings miss slammed equities overnight. However, as of this writing, stocks are still down but off the lows.
- The dollar, meanwhile, remains on the defensive with one eye on the risk mood set by equities.
- EURUSD has been pivoting 1.17 and USDJPY 156, both likely to set respective trading tones.
- Worth noting is EURUSD holding (2 pips) above the 1.1680 support cited late yesterday (scroll below) and then bounced. A break of the 6 day pattern printing 1.1650 is a positive.
- AUDUSD is weakest but off its low
- USDCHF is lower after an as expected SNB hold on rates.
- In the US, weekly jobless claims will be a focus, expecting a rebound from a surprise drop last week.
- US balance of trade is also due but has not been a market moving report.
Forex Market Snapshot
The dollar is trading firmer as part of some general profit taking/book squaring in other markets as well.
While still in its current ranges some recent dollar highs (e.g. USDCAD. EURUSD should it break 1.1610) are back on the chart radar.
EURUSD 1.1531
GBPUSD 1.3248
USDJPY 153.27
USDCAD 1.4080
USDCHF .8076
AUDUSD .6440
USDCHF bounces from the cycle lows: just a pullback or a reversal?
Fundamental OverviewThe USD strengthened a bit on Friday following some positive Trump’s comments on China as Treasury yields bounced and erased the Thursday’s losses. Overall, the US dollar performance has been mixed as markets have been driven by quick changes in risk sentiment since Trump’s tariffs threat.
On the domestic side, the US government shutdown continues to delay many key US economic reports. The dollar “repricing trade” needs strong US data to keep going, especially on the labour market side, so any hiccup on that front is weighing on the greenback.
The BLS will release the US CPI report on Friday despite the shutdown, so that’s going to be a key risk event. That will need to be seen in the context of US-China relations and any negative shock by that time though. If things go south, then the CPI will not matter much as growth fears will trump everything else.
On the CHF side, nothing has changed. The SNB left interest rates steady and kept everything unchanged at the last meeting. SNB’s President Schlegel didn’t offer any forward guidance but he did say that the bar to cut rates further is very high and negative inflation prints in the short-term won’t be enough.
The last Swiss inflation prints rebounded a bit but there’s a long way to go before breaching their 2% inflation limit. So, this leaves the CHF trading mostly based on risk sentiment.
USDCHF Technical Analysis – Daily Timeframe
USDCHF daily
On the daily chart, we can see that USDCHF broke below the major upward trendline last week and extended the drop into the 0.7872 level before pulling back a bit after some positive Trump’s comments on tariffs. If the price rolls over again, we can expect the buyers to step in around the 0.7872 level with a defined risk below it to keep targeting a rally 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: BIG PICTURE
- Daily chart shows sharp move down from .8076 as safe haven demand drives CHF higher (on crosses as well)
- Break of .7900, if it holds, would put major .7828 support on the radar.
- Back above .7900=28 would cool the move but only back above .7985 would negate the risk.
- Watch US stocks today as that is setting the risk off mood.
USDCHF DAILY CHART
USDCHF Tug-of-War
When you see CHf move in opposite direction vs. others there is usually a cross involved, creating a tug-of war between the currency pairs.
Pop in USDCHF after the SNB meeting paused shy of this week’s .7973 high.
This keeps it in its range where a break of .7941 would be needed to end upward momentum.
USDCHF 1 HOUR CHART
USDCHF
While the chart shows the bottom is likely in (14 low territory), it would take a break of 8007 for it to be game over for the downtrend.
Resistance at trendline + .7948-86 stands in the way.
Note firmer US yields has weighed on interest sensitive currencies like the CHF and JPY, both losing ground to the EUR.
USDCHF 4 HOUR CHART
