- Swiss franc reverses sharply against the US Dollar, turns lower and signals a potential shift in momentum.
- Key events ahead: ECB meeting and Non-farm Payrolls.
The USD/CHF rose sharply over the last hours, gaining more than a hundred pips over the last hours, on the back of a rally of the US Dollar across the board.
Greenback turns to the upside, despite US data
Following the release of the ADP employment report, the USD/CHF bottomed at 0.9852, the lowest level since January. Then rebounded, boosted by a recovery of the greenback and gained more strength after the US ISM non-manufacturing report that surpassed expectations. The dollar rallied as equity prices in Wall Street held to gains and while US bond yields remained near multi-year lows.
The move to the upside continued over the last hours and recently the pair reached a fresh daily high at 0.9944, almost a hundred pips above day’s low. The sharp reversal points to a potential short-term bottom, so some consolidation ahead with a bullish bias seems likely. A decline back below 0.9900 would remove the positive momentum.
On Thursday, the European Central Bank will have its monetary policy meeting. No change in rates is expected but the statement, the projections, details and Draghi’s press conference are likely to have an influence on the Swiss franc. In the US, now attention turns to Friday’s official employment report, particularity after today’s weak ADP reading.
“Friday’s US jobs report may not be enough to stem the wave of economic pessimism sweeping over markets. But with broader signs that wage growth is rising, consumer spending should continue to keep the economy underpinned for the time being. We don’t expect Fed rate cuts in the immediate future“, mentioned ING analysts.
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