Heads up, euro traders!
The ECB decision is coming up soon and another hike is eyed.
Can this allow EUR/CHF to resume its climb?
Before moving on, ICYMI, yesterday’s watchlist looked at AUD/NZD’s bearish channel resistance ahead of top-tier releases from New Zealand and Australia. 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:
U.S. headline producer prices dipped 0.1% m/m in February versus estimated 0.3% uptick, core PPI stayed flat instead of posting the estimated 0.4% gainU.S. headline retail sales slipped 0.4% m/m in February versus expectations of a 0.3% dip, previous reading upgraded from 3.0% to 3.2%
U.S. core retail sales fell by 0.1% m/m as expected in February, previous figure upgraded from 2.3% to 2.4% gain
U.S. Empire State manufacturing index slipped from -5.8 to -24.6 vs. estimated -7.9 reading in March, as new orders dropped significantly
Goldman Sachs raised probability of U.S. recession from 25% to 35% on potential banking crisis impact on growth
New Zealand economy contracted 0.6% q/q in Q4 2022 vs. estimated 0.2% growth slowdown, previous reading downgraded from 2.0% to 1.7% growth
Japanese core machinery orders jumped by 9.5% m/m in January vs. estimated dip from 1.6% to 1.5%
Japan’s Feb trade deficit narrowed from 1.82T JPY to 1.19T JPY vs. estimated 1.46T JPY shortfall, as exports increased by 4.4% m/m while imports fell 3.0% m/m
Australia’s MI inflation expectations dipped from 5.1% to 5.0% in February
Australian employment increased by 64.6K in Feb vs. estimated 49.7K gain and previous 10.9K reduction in hiring, bringing jobless rate down from 3.7% to 3.5% vs. 3.6% forecast
Credit Suisse to borrow up to 50B CHF from SNB and announces public tender offers for debt securities, as bank takes action to preemptively bolster liquidity
Price Action News
After trading in a pretty tight range, volatility picked up for franc pairs in the previous trading sessions when headlines on Credit Suisse’s woes continued to fuel fears of a bank run.
The selloff eased towards the end of the U.S. session and in the early Asian market hours, as the bank announced its plans to preemptively boost liquidity by borrowing from the SNB and publicly selling some of its debt securities.
This put franc pairs back in range again, with the Kiwi returning most of its gains when downbeat New Zealand GDP data was printed.
Upcoming Potential Catalysts on the Forex Economic Calendar:
U.S. initial jobless claims at 12:30 pm GMT
U.S. Philly Fed index at 12:30 pm GMT
ECB monetary policy statement at 1:15 pm GMT
ECB press conference at 1:45 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
I’m counting on another burst of volatility for this particular franc pair later today, as the ECB gears up to announce its monetary policy statement.Several ECB officials have already been calling for more aggressive tightening efforts earlier on, citing the need to do more in order to ensure that inflationary pressures are kept in check.
Analysts have priced in a 0.50% rate hike, but market watchers might even get a few remarks reassuring that the European financial sector remains stable amid fears of bank runs stemming from the SVB collapse.
If that’s the case, we might see a pop higher for EUR/CHF as it pulls back to attract more bullish attention around the area of interest just above .9800.
If support holds and the ECB remains optimistic, the pair could surge past the previous day high and onto the next upside target at R1 (.9930) of its Standard Pivot Points.
Sustained bullish momentum might even take it up to the R2 close to parity, but it’s also worth noting that the average EUR/CHF daily volatility is 57.1 pips.