A potentially big day for the Greenback with the FOMC monetary policy decision coming soon makes the momentum in USD/CHF an easy watchlist pick for the session!
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 11187.50 -0.28% FTSE: 6941.69 +1.58% S&P500: 2650.29 +0.39% DJIA: 24820.33 +0.98% |
US 10-yr 2.72% +0.008 Bund 10-YR 0.191% -0.006 UK 10-YR: 1.254% -0.021 JPN 10-YR: 0.003% +0.004 |
Oil: 53.92 +1.14% Gold: 1309.60 +0.05% Bitcoin: 3436.30 +1.87% Etherium: 107.77 +4.46% |
Fresh Market Headlines & Economic data:
- Theresa May: MPs’ vote not enough to kill threat of no-deal Brexit
- Brexit: May and Corbyn clash ahead of meeting
- U.S. added 213,000 private-sector jobs in January, ADP says
- Consumer climate in Germany is rising
- CPI in Germany increased to 112.50 Index Points in Dec. from 112.40 Index Points in Nov. 2018
- Japan Consumer Confidence Eases For Fourth Month
- Swiss KOF Economic Barometer Falls For Fourth Month
- Australia inflation muted but no smoking gun for rate cuts
- Oil prices rise as US sanctions on Venezuela raise supply concerns
- U.S. pending home sales fall in December
Upcoming Potential Catalysts on the Forex Calendar:
- FOMC Statement at 7:00 pm GMT
- Fed’s Powell holds news conference in Washington at 7:30 pm GMT
- Japan Industrial Production at 11:50 pm GMT
- Bank of Japan Summary of Opinions at 11:50 pm GMT
What to Watch: USD/CHF
As mentioned at the top of this post, big volatility could be ahead with the FOMC monetary policy decision coming at 7:00 pm GMT. Right now the expectation is that the Fed will leave policy unchanged and stick with the rhetoric of being data dependent and patient with any policy changes. Also, any comments on their balance sheet will be closely watched as any “pause” to their current reduction program could have traders hitting the buy button on risk assets. It’s also likely though that Fed Chair Jerome Powell will focus on keeping his comments measured to avoid shaking up the financial markets.
But if we do see a pop in volatility and the rhetoric comes out as Greenback bullish, USD/CHF is a great pair to watch. It’s already on an upswing on the session, likely on a combination of the better-than-expected ADP Non-farm payrolls number release earlier (213K vs. 180K forecast) and weaker sentiment data from Switzerland earlier today.
The pair is currently testing a minor resistance area just under parity, so a break higher here could draw in more buyers if the Fed signals no change to their balance sheet reduction program and/or further rate hikes in 2019. The next potential resistance area may not come until the 1.0050 to 1.0100 area, which is well within the daily ATR range of around 60 pips.
For the bears, a sell-off is a possibility if their comments signal a little bit of policy easing with a pause of their balance sheet reduction program and/or no further rate hikes in 2019. This could take the pair to the recent swing lows just above the .9900 handle, which again is possible within the next session or two given the daily average true range.
For those who don’t want to pick a direction, then a straddle strategy is something to consider given the potential for today’s event to bring volatility and a strong directional bias. Check out our News trading Straddle lesson here!
