Checking out AUD/CHF today as momentum has picked up for Swiss franc bulls and Australian home loans data could spark further volatility for the Aussie.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/USD ahead of U.K. inflation data, so be sure to check that out to see if there is still a potential play!
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 13417.38 -0.29% FTSE: 7624.54 +0.03% S&P 500: 3296.63 +0.41% DJIA: 29099.10 +0.55% |
US 10-yr 1.792% -0.026 Bund 10-YR -0.206% -0.034 UK 10-YR: 0.645% -0.078 JPN 10-YR: 0.012% +0.001 |
Oil: 57.52 -1.22% Gold: 1550.20 +0.36% Bitcoin: 8765.71 -1.45% Etherium: 162.52 -3.67% |
Fresh Market Headlines & Economic Data:
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- OPEC expects lower demand for its oil as U.S. hits new milestone
- Kudlow says ‘tax cuts 2.0’ will be unveiled later this year during Trump presidential campaign
- Mnuchin says more tariffs will be rolled back in phase two of trade deal
- PPI shows tepid increase in U.S. wholesale inflation at the end of 2019
- Empire State Manufacturing Survey rises modestly to 4.8 in January vs. 3.5 in December.
- Canadian home sales inch lower in December by 0.9% m/m
- BOE Saunders says U.K. needs aggressive response to risks
- Expectations of BoE rate cut rise after UK inflation falls to three-year low
- Industrial production up by 0.2% in euro area; Down by 0.1% in EU28
- Euro area international trade in goods surplus €20.7B; €2.6B surplus for EU28
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- U.S.-China Phase 1 Trade deal signing (tentative)
- Fed Harker speech at 4:00 pm GMT
- Fed Beige Book at 7:00 pm GMT
- Japan Tankan Index at 11:00 pm GMT
- Japan Machinery orders & PPI at 11:50 pm GMT
- Australia Home loans at 12:30 am GMT (Jan. 16)
- China House price index at 1:30 am GMT (Jan. 16)
What to Watch: AUD/CHF
The Swiss franc pairs don’t usually hit the watchlist, but we’ve noticed the safe haven rallying over the past few sessions, possibly due to recent headlines sparking buying speculation (Switzerland rejects U.S. allegations of currency manipulation and Swiss National Bank under rising pressure after five years of negative rates). Whatever the catalyst may be, the momentum is strong for the franc at the moment so we’ll run with the trend, pairing it with recent weakness in the Aussie, which is still likely under pressure of potential rate cuts ahead from the RBA.
Looking at the one hour chart above of AUD/CHF, we can see the pair recently broke below a strong support area around the 0.6700 major psychological handle, which if retested, could draw in more sellers. We could see a bounce to that area again on a range of potential catalysts including the upcoming Australian home loans data, the U.S.-China signing of Phase 1 trade deal, and/or general shifts in global risk sentiment. If so, look out for bearish reversal patterns around the 0.6700 and/or the stochastic indicator back on overbought territory before considering a short-term short position.
For the bulls on AUD/CHF, a retest of the recent swing low around 0.6625 could draw in fresh buyers/short position profit takers. That move lower not only looks overextended based on the stochastic indicator, but could be a jump off point for those looking to play the positive global risk sentiment theme (i.e., improving U.S.-China trade relations, Middle East conflict fears easing) and a positive surprise in Australian economic data.
