- The Fed will be paying close attention to the jobs report and giving it more weight.
- The price is stuck around 0.9600, looking for a catalyst.
The USD/CHF price was consolidating around the 0.9600 level ahead of the jobs report from the United States. There is a lot of uncertainty regarding the Federal Reserve’s pace and size of interest rates in the coming months.
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A good jobs report could mean more extensive rate hikes to control inflation. On the other hand, an alarming report could mean a pause in rate hikes. The balance between growth and inflation is not an easy one. For this reason, the Fed is paying very close attention to the economy’s health, giving more weight to today’s jobs report.
“If we have a significant deterioration in the labor markets over the summer, then I would say there is a risk of recession next year. But we don’t see this for the time being,” said Francois Savary, Chief Investment Officer of Swiss wealth manager Prime Partners.
Investors will wait to see the report, and the reaction might cause a lot of volatility in USD/CHF.
USD/CHF key events today
Today is a big day for dollar pairs, and USD/CHF investors will be keeping an eye on the employment data coming out in the US, mainly the Nonfarm Payrolls and Unemployment Rate for May. Investors expect the nonfarm payroll to go down from 428K to 325K. A smaller than expected value could push USD/CHF lower, while a larger than expected one could push the pair higher.
Investors will be watching the unemployment rate, which they expect to drop from 3.6% to 3.5%. Finally, the ISM Non-Manufacturing PMI will be released later in the day. The consensus on this is that 56.4 is coming down from 57.1.
USD/CHF price technical analysis: 0.9600 remains the pivot
The 4-hour chart shows the price consolidating at 0.9600, which also happens to be where the 30-SMA is currently. Consolidation shows that there is indecision in the market. Neither the bulls nor the bears are more robust.
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The winning side will push the pair either above or below the 30-SMA. The RSI, which is currently trading at around 47, will be either above 70 or below 30 when the winner is decided. Until then, the best position would be on the sidelines.
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Saqib Iqbal
