Fundamental Overview
The USD performance has been mixed in the past days but still on net negative despite the decreasing December rate cut odds. It looks like the stock market is what has been driving all other markets.
In fact, when the stock market had positive days, we’ve seen Treasury yields and the US dollar rising, but when stocks performed poorly, Treasury yields and the greenback gave back the gains. The market might be thinking that a selloff in the stock market is going to weigh significantly on the economy, eventually requiring the Fed to cut more or more aggressively.
The focus now is of course on the Fed and the US data ahead of the December FOMC meeting. The market pricing is now showing just a 42% chance of a cut in December, so the data will have the final say.
I don't think the September NFP on Thursday is going to matter much if it's soft given that it's old data, but a strong report might be taken as meaningful because the market could think that conditions were already getting better in September before the two rate cuts.
Therefore, I think the November NFP is going to have the final say, which will hopefully get released just before the FOMC meeting in December (we won't get the November CPI in time).
On the CHF side, nothing has changed. The SNB left interest rates steady and kept everything unchanged at the last meeting. SNB’s members continue to repeat that the bar for negative rates is high, and Chairman Shlegel recently said that he expects inflation to rise slightly in the next quarters.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF dropped all the way back to the 0.7882 level. The buyers stepped in there with a defined risk below the level to position for a rally back into the 0.8073 level. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor resistance zone around the 0.7980 level. That’s where we can expect the sellers to step in with a defined risk above the resistance to position for a drop back into the lows. The buyers, on the other hand, will look for a break higher to increase the bullish bets into the 0.8073 level.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor support zone around the 0.7925 level. If we get a pullback, we can expect the buyers to step in there with a defined risk below the support to position for a rally into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 0.7872 level next. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the weekly ADP jobs data. Tomorrow, we have the FOMC meeting minutes. On Thursday, we get the September NFP report and maybe the US Jobless Claims data. On Friday, we conclude the week with the US Flash PMIs.
