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  • USD/CHF refrains from extending the previous downpour.
  • The USD’s across the board weakness previously dragged the pair to a one-week low.
  • Swiss GDP, trade/political headlines will be in the spotlight for now.

With the traders covering their US Dollar (USD) shorts, the USD/CHF bounces off 21-day simple moving average (DMA) amid initial Thursday in Asia.

The pair earlier dropped to one-week-low as markets turned anti-greenback amid mixed signals of the Fed’s future moves and wider than expected $-53.5B trade deficit to $-54.0B. Adding to the USD’s downside pressure could also be comments from the European Central Bank’s (ECB) nominated President Christine Lagarde who emphasized on fiscal measures rather than only taking support of the monetary policy moves, indicating a shift in the central bank’s future actions.

It is worth noting that investors mostly ignored a slew of Fed speakers’ speeches as lacking any critical signal for the US central bank’s future rate cuts.

During early Asian morning, the US levied anti-dumping duties on structural steel imports from China and Mexico. However, traders seem to care less for the same as the US 10-year treasury yield, market’s risk barometer, remain positive to 1.476%. It should also be noted that receding odds of a no-deal Brexit and an absence of escalation in the US-Iran tussle adds strength to markets’ risk sentiment.

While trade/political headlines could offer intermediate moves, Switzerland’s second quarter (Q2) gross domestic product (GDP) will become the key catalyst to determine near-term trade direction. Furthermore, the US calendar will also be crucial as it offers data for August month’s ADP Employment Change, ISM Non-Manufacturing Purchasing Managers’ Index (PMI) and Factory Orders for July. Forecasts suggest Swiss GDP to soften to 0.2% and 0.9% on QoQ and YoY basis respectively against 0.6% and 1.7% priors.

Technical analysis

While 0.9800 mark, also comprising 21-DMA, acts as a near-term key support, a rising trend-line since August low, at 0.9765, becomes additional rest to watch during the pair’s further declines. On the contrary, 50-day DMA level of 0.9835, 0.9900 and the monthly top close to 0.9930 could lure buyers in a case of pair’s upside.