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  • CHF strength this week was due to safe-haven flows stemming from an ever-increasing complicated geopolitical context particularly with North Korea and China.  
  • The US Non-Farm Payroll, Gross Domestic Product and the Personal Consumption Expenditure are all expected next week and can give a boost to the greenback.  

This week has been dominated by safe-haven flows. Investors rushed to the Swiss franc, the Yen and gold. News of the trade war being “put on hold” and the new plan of the Trump administration to slap 25% tariffs on imported vehicles made investors rather agitated. Moreover, the convoluted Italian political situation saw the main European stock indices trade to weekly lows benefitting to the Swiss franc.  

The Swiss franc is currently trading at around 0.9930 up 0.10% on Friday.  

On the US macroeconomic picture, next week’s salient event will be the Non-Farm Payroll data for the month of May and the Average Hourly Earnings (wage’s growth).  

Investors will also closely watch the Core Personal Consumption Expenditure (PCE), which is the favorite gauge of inflation used by the Federal Reserve Bank. It is expected to rise to 2% according to estimates. Fed officials have made rather upbeat comments of late and a drop in the PCE indicator would be surprising. The Gross Domestic Product (GDP) on Wednesday will equally be closely followed by investors as they expect the US economy to expand. The Swiss GDP is also scheduled next week but will likely provide less volatility than the American one.  

USD/CHF daily  chart  

The main bull trend is losing momentum has it formed a double top with the highs of one year ago in the 1.0050 region. Bulls see the current move down as a correction or a bull flag while bears think that the market has topped out and see the move lower as the start of a bear trend. The next likely support to the downside is seen at the 0.9860 level which is the 23.6% Fibonacci retracement level from mid-February to early May. If the level is broken to the downside the next scaling point is located in the 0.9700 region close to the 38.2% Fibonacci retracement. To the upside, bulls will likely meet resistance at the parity level, 1.0000 and then at the 2018 high at the 1.0057 level. The Swissy looks rather weak at this point and if bulls do not manage to gather any momentum it looks like the slide is set to continue further.