Swiss Franc drops sharply today on speculation that SNB will respond to the expected easing by ECB in December with some actions. That might include intervention in the currency markets and extended use of negative interest rates. Also, there are talks that traders would like to go long dollar and the Swiss Franc is at the moment a preferred choice. After all, USD/CHF took out 1.0239 key resistance this week and is heading to long term fibonacci level at 38.2% retracement of 1.8305 to 0.7065 at 1.1359. EUR/CHF also breached a near term resistance at 1.0917 and would be targeting 1.1049 resistance next.
UK GDP grew 0.5% qoq in Q3, unrevised. Index of services rose 0.7% 3mo3m in September. Gfk consumer sentiment dropped to 1 in November. Eurozone confidence indicators were mixed in November. Business climate dropped to 0.36 versus expectation of 0.45, economic confidence rose to 106.1 versus expectation of 105.9, industrial confidence dropped to -3.2 versus expectation of -2.1, services confidence rose to 12.8 versus expectation of 12.0, consumer confidence rose to -5.9 versus expectation of -7.9.
Japan national CPI core stayed unchanged at -0.1% mom yoy in October. However, Tokyo CPI core improved more than expected to 0.0% yoy in November. Household spending dropped sharply by -2.4% yoy in October. Nonetheless, unemployment rate dropped to 3.1% in October, hitting the lowest level in 20 years. Opinions on whether BoJ would ease monetary policies further are divided. There are some analysts expecting further stimulus early 2016 as deflation remained and the economy relapsed into recession in July-September quarter. However, it’s clear that many BoJ officials are reluctant to expand easing for the moment and would like to wait and see the impact of Fed’s expect rate hike first.
Daily Pivots: (S1) 1.0209; (P) 1.0230; (R1) 1.0257; More….
USD/CHF’s rally continues today and the strong break of 1.0239 resistance confirm upside momentum. Intraday bias is now on the upside for 161.8% projection of 0.9256 to 0.9842 from 0.9475 at 1.0423. On the downside, break of 1.0143 support is needed to indicate short term topping. Otherwise, outlook will remain bullish in case of retreat.
In the bigger picture, USD/CHF is breaking out from recent triangle consolidation pattern. Further rise should be seen back to 1.0239 key resistance. We’d be cautious on strong resistance from there to limit upside. But decisive break there will confirm long term trend reversal. In that case, USD/CHF would target long term fibonacci level at 38.2% retracement of 1.8305 to 0.7065 at 1.1359. We’ll stay cautiously medium term bullish as long as 0.9842 resistance turned support holds.
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 23:30 | JPY | Jobless Rate Oct | 3.10% | 3.40% | 3.40% | |
| 23:30 | JPY | Household Spending Y/Y Oct | -2.40% | 0.00% | -0.40% | |
| 23:30 | JPY | National CPI Core Y/Y Oct | -0.10% | -0.10% | -0.10% | |
| 23:30 | JPY | Tokyo CPI Core Y/Y Nov | 0.00% | -0.10% | -0.20% | |
| 00:05 | GBP | GfK Consumer Sentiment Nov | 1 | 2 | 2 | |
| 09:30 | GBP | GDP Q/Q Q3 P | 0.50% | 0.50% | 0.50% | |
| 09:30 | GBP | Index of Services 3M/3M Sep | 0.70% | 0.80% | 0.90% | |
| 10:00 | EUR | Eurozone Economic Confidence Nov | 106.1 | 105.9 | 105.9 | |
| 10:00 | EUR | Eurozone Business Climate Indicator Nov | 0.36 | 0.45 | 0.44 | |
| 10:00 | EUR | Eurozone Industrial Confidence Nov | -3.2 | -2.1 | -2 | |
| 10:00 | EUR | Eurozone Services Confidence Nov | 12.8 | 12 | 11.9 | |
| 10:00 | EUR | Eurozone Consumer Confidence Nov F | -5.9 | -7.9 | -6 | |
| 13:30 | CAD | Industrial Product Price M/M Oct | -0.50% | -0.10% | -0.30% | -0.40% |
| 13:30 | CAD | Raw Materials Price Index M/M Oct | 0.40% | 0.40% | 3.00% | 2.40% |
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Mid-Day Report: Swiss Franc Dives on SNB Speculations
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