Risk aversion and hawkish Fed speeches have put the dollar back to bullish territory.
Will the dollar-buying lead to an upside breakout for USD/CHF?
Before moving on, ICYMI, yesterday’s watchlist checked out NZD/USD for some trend continuation action ahead of New Zealand’s labor market data release. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Canada’s manufacturing PMI slows from 55.7 to two-year low of 52.5 in July
U.S. JOLTS job openings fall from 9-month low of 10.7M in June
Fed’s Evans: 50bps hike in September ‘reasonable,’ 75 bps hike also on the table
Fed’s Daly: “Nowhere near almost done” with rate hikesFed’s Bullard: rates will have to remain “higher for longer” if inflation doesn’t respond to rate hikes
OPEC+ JTC lowered 2022 surplus forecast by 200K barrels bpd to 800K bpd
Caixin: China July services activity expands (55.5) at quickest pace in 15 months
Australia’s construction sector contracts for second month (45.3) in July
New Zealand jobless rate unexpectedly rises from 3.2% record low to 3.3% in Q2
New Zealand employment market tight as wage inflation hits 14-year high
Solana cyberattack: More than 8,000 ‘hot wallets’ drained of SOL and USDC
UK’s Liz Truss has 34 point lead over Sunak – YouGov/Times Poll
German exports surge by 4.5% to record level in June
Euro zone business activity contracted in July as customers stayed home
UK services firms slow again, price pressures ease slightly – PMI
European shares slip on mixed earnings, gloomy economic data
Dollar edges higher; boosted by hawkish Fed officials, Pelosi visit
Upcoming Potential Catalysts on the Forex Economic Calendar:
OPEC meetings scheduled today
Eurozone’s retail sales at 9:00 am GMT
U.S. ISM services PMI at 2:00 pm GMT
U.S. factory orders at 2:00 pm GMT
U.S. EIA crude oil inventories at 2:30 pm GMT
AU trade balance at 1:30 am GMT (Aug 4)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: USD/CHF
USD/CHF started the week by breaking above (and successfully retesting) a trend line resistance that had been supporting USD bears since mid-July.
USD/CHF bounced from the broken trend line and .9550 and is now testing the 1-hour chart’s 200 SMA for the second time in less than a week.Can USD bulls maintain their momentum? Uncle Sam is printing a Services PMI report later today, and markets think we would see slightly lower numbers similar to what other major economies have showed.
A worse-than-expected reading would point to the services industry being more vulnerable while Fed officials are still talking rate hikes.
USD/CHF could dip back to (if not below) the broken trend line resistance in the next trading sessions.
But if traders focus on escalating tensions in Taiwan’s region, or if today’s headlines bring the markets’ focus back to global growth concerns, then USD could get a boost from risk aversion trades.
USD/CHF could trade above the 200 SMA and head for previous inflection points like .9650 or .9735.