- USD/CHF declines amid calls of troubles on the road to the US-China trade deal.
- Fedspeak seems broadly directionless recently, highlights importance for further clues amid fresh optimism.
With the global media citing challenges to the “Phase One” trade deal between the US and China, the USD/CHF pair steps back from the weekly top to 0.9925 during early Wednesday.
The quote previously surged as growing optimism surrounding the US-Sino trade agreement joined upbeat activity numbers from the United States (US), which in turn signaled a stop to the Federal Reserve’s (Fed) further rate cuts.
However, recent headlines from Nikkei and Global Times are indicting troubles in the trade accord between the world’s two largest economies. While Nikkei emphasize China’s strong demand to reverse the US tariffs, Global Times relies on ex-Vice Commerce Minister of China to strengthen the doubts.
Also adding to the market’s uncertainty is recent comments from the US Federal Reserve (Fed) policymakers. Dallas Fed President Robert Kaplan and Minneapolis Federal Reserve President Neel Kashkari’s latest public appearance seem to tame the earlier optimism, based on the US activity numbers, suggesting a stop to the Fed’s further rate cuts.
As a result, the US 10-year treasury yields consolidate recent gains to 1.84% while Asian stocks also wait for further clues before extending the previous run-up.
Given the absence of major data/events, trade headlines will be the key market driver. Though, the importance of statements from the Federal Reserve Bank of Chicago President Charles Evans and Federal Reserve Bank of New York President John Williams will not be undermined.
Technical Analysis
Prices need a sustained break beyond 0.9970 to aim for 1.000 mark while downside seems to be capped by October month low of 0.9837.
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