Solid run higher for USD/CHF this week, but it’s now running into minor resistance. Reversal time or just a speed bump in the rally?
Intermarket Snapshot
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US 10-yr 2.529% +0.007 Bund 10-YR -0.01% +0.003 UK 10-YR: 1.16% -0.018 JPN 10-YR: -0.031% +0.012 |
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Fresh Market Headlines & Economic data:
- US weekly jobless claims post biggest rise in 19 months
- US durable-goods orders surge 2.7% to 7-month high, business investment rebounds
- UK retail sales grew for the first time since November 2018 in the year to April
- Spain unemployment edges up after election debate clash over jobs
- BOJ says super-low rates to last another year, giving first timeframe
- Highlights – BOJ Governor Kuroda comments at news conference
Upcoming Potential Catalysts on the Forex Calendar:
- New Zealand trade balance 11:45 pm GMT
- Japan unemployment rate & core CPI at 12:30 am GMT (Apr. 26)
- Japan industrial production & retail sales at 12:50 am GMT (Apr. 26)
- Australia producer prices at 2:30 am GMT (Apr. 26)
- Japan housing starts & construction orders at 6:00 am GMT (Apr. 26)
- SNB Chairman Jordan speaks in Berne at 9:00 am GMT (Apr. 26)
- U.S. advance GDP at 1:30 pm GMT (Apr. 26)
What to Watch: USD/CHF
On the calendar ahead, I think the only likely spark for fresh moves will be from the U.S. advanced GDP number coming in the Friday session, which is expected to come in at 2.2%, inline with the previous quarter. Coming inline with expectations would confirm no bounce in economic growth, which would likely draw in some sellers on the event. The Greenback has been on a pretty strong run this week, so it makes that we may even see some profit taking ahead of the number.
In USD/CHF, we can see the pair ran up from the week open around 1.0135 to 1.0230, where is meeting minor resistance at the moment. So, if there is profit taking or selling on the event, the bears should be on a look out for a break of the rising ‘lows’ pattern marked on the one hour chart above as the potential short signal. For those more aggressive and expecting weak U.S. GDP data, then shorting from current levels up to 1.0220 is credible strategy as well. Using the daily ATR of around 40 – 50 pips as a stop gives a very good potential short-term return-on-risk if targeting the minor psychological area of 1.0150. For the bulls, a strong GDP surprise would likely bring in the buyers to break that 1.0220 resistance, and without resistance levels seen beyond that since 2017, the pair could go on a strong run.
We should also take note that Swiss National Bank Chairman Thomas Jordan will be speaking during the upcoming European trading session. It’s a very low probability that he would deviate from the usual “Swiss franc overvalued” and “willing to intervene in currency markets” rhetoric, but he is the head of the SNB so if there is a surprise change in rhetoric in his speech, the franc is very likely to strongly react. Stay on your toes!
