USDCHF SIGNAL 25-08-22 : USDCHF pares weekly gains above 0.9600 with eyes on Jackson Hole.
- USD/CHF prints the biggest daily loss in two weeks as US dollar eases ahead of the key data/event.
- Stimulus from China, hopes of less hawkish central bankers underpin cautious optimism.
- Options market signals also favor intraday bears amid sluggish session.
- US GDP, Core PCE will decorate the calendar but risk catalysts are the key.
USDCHF takes offers to refresh intraday low near 0.9625 during early Thursday morning in Europe. In doing so, the Swiss currency (CHF) pair drops the most in nearly two weeks amid broad US dollar weakness.
USDCHF SIGNAL : That said, the US Dollar Index (DXY) slides half a percent as bears attack the 108.00 mark as risk-on mood dampens the greenback’s safe-haven demand. Also exerting downside pressure on the DXY is the recently softer US Treasury yields.
While tracing the catalysts, mixed data and the impending economic slowdown concerns, which are likely to push markets towards hoping for an absence of the major hawkish announcement from Fed Chair Jerome Powell during Friday’s speech, seem to have favored the DXY fall.
On the same line could be stimulus from China amid economic optimism in the world’s second-largest economy. China’s Cabinet, State Council, outlined a 19-point policy package while announcing economic stimulus measures worth CNY1 trillion ($146 billion) to stimulate growth affected by covid lockdowns and property market crisis, per Bloomberg. Additionally, Li Zhong, Vice Minister of the Ministry of Human Resources and Social Security, said on Thursday that China will focus on expanding jobs and promote fiscal, monetary and industrial policies to support job market stabilization.
USDCHF SIGNAL : Amid these plays, the market sentiment improves and weighs on the US Dollar. That said, the US 10-year Treasury yields rose the most in a week the previous day while refreshing a two-month high to around 3.10%. However, mixed concerns seem to have probed the US bond sellers of late. That said, the Wall Street benchmarks printed mild gains, which in turn helped S&P 500 Futures to remain mildly bid at around 4,150 at the latest.
Moving on, the second version of the US Q2 GDP will join the US Personal Consumption Expenditure (PCE) for the said period will be important. However, major attention will be given to Fed Chair Powell’s showdown on Friday.
Considering the likely upbeat expectations from the scheduled data, any positive surprise could help the USD/CHF prices to consolidate the latest losses. Even so, major moves appear less likely to happen.
Technical analysis
A clear downside break of a two-week-old ascending trend line, at 0.9625 by the press time, appears necessary for the USD/CHF bears to retake control.
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