Traders shifted into risk-on mode this week, and with fresh Chinese data coming within the next session, the Aussie versus the ‘safe haven’ franc is a pair to watch today.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 11188.92 +0.56% FTSE: 7196.01 +0.88% S&P500: 2758.33 +0.50% DJIA: 25578.92 +0.60% |
US 10-yr 2.7.13% +0.029 Bund 10-YR 0.135% +0.003 UK 10-YR: 1.203% +0.015 JPN 10-YR: -0.013% -0.002 |
Oil: 54.07 +1.83% Gold: 1316.30 +0.17% Bitcoin: 3573.95 -0.56% Etherium: 120.65 -0.49% |
Fresh Market Headlines & Economic data:
- U.S. consumer prices unchanged in January
- Trump expected to sign bipartisan funding deal
- Xi will reportedly meet with Mnuchin, Lighthizer as US and China try to strike a trade deal
- Mortgage applications drop 3.7% as homebuyers pull back
- Europe Looks Like the Real Weak Link in the Global Economy
- Industrial Production down by 0.9% in the Euro area
- UK inflation falls to two-year low in January
- Theresa May facing fresh move by cross-party group of MPs to block no-deal
- The RBNZ just sent the New Zealand dollar hurtling higher
- Global oil supply to swamp demand in 2019 despite output cuts
Upcoming Potential Catalysts on the Forex Calendar:
- Fed ‘s Mester speaks in Lexington at 1:30 pm GMT
- Monthly U.S. Treasury Statement at 7:00 pm GMT
- RBNZ Governor Orr speaking on monetary policy statement at 7:10 pm GMT
- New Zealand Food price index at 9:45 pm GMT
- Japan GDP at 11:50 pm GMT
- Chinese Trade Balance data coming Feb. 14
What to Watch: AUD/CHF
Traders are back into risk-on mode today, thanks to growing optimism on the U.S.-China trade deal. It was commentary from U.S. President Trump that the March 1 deadline for a deal with China may not be set in stone after all that had equities, bond yields and commodities moving higher on the session.
The Aussie naturally benefits in this type of situation with China as its largest trading partner, and we’ve seen it move higher this week as U.S.-China trade sentiment improved this week. And with risk sentiment positive, it makes sense that the safe haven Swiss franc is taking a hit at the same time.
AUD/CHF bulls should continue to benefit in this environment, and we have a potential catalyst coming tentatively tomorrow in the form of China’s latest read on import and export data. If positive, the rally on the one hour chart we’re seeing now could lift further, but there is potential for short-term resistance around the 0.7200 handle as it was a support area as recent as last week. A break there on positive China news is something to watch for over the next session or two.
If Chinese data comes in negative or global risk sentiment shifts back into negative beforehand, an argument could be made for a short play below the rising ‘lows’ on AUD/CHF, with a more conservative entry below the consolidation area around the 0.7100 handle.