Dollar Strength Lifts USD/CHF
Frankfurt (June 8) USD/CHF is higher in today’s session, currently holding near 0.9665, a gain of 0.19% over Wednesday’s North American close. The pair is higher as the US dollar index (DXY) is up 0.18% on the day, trading at 96.87. However, both DXY and USD/CHF appear to be merely reacting to the severe oversold condition which developed as a result of the sharp declines in to the June reaction lows. On a broader basis, the bias remains to the downside.
First resistance for USD/CHF is near the mid-point of June 2nd’s open-close range at 0.9670, which comes in near the same level as the lows established May 31st and June 1st. This level is currently being tested and a failure to break above on a sustained basis would keep the near term bias firmly to the downside and suggest a resumption of the broader decline could take place over the near term.
More significant resistance for the pair is at former support at the 0.9700 level. A sustained break above 0.9700 is required to improve the broader outlook for USD/CHF. At present, such a development appears unlikely and periods of strength appear best used as selling opportunities.
USD/CHF experienced little immediate reaction to this morning’s data releases out of Switzerland. Jobless data for May was released today in the pre-European session at 01:45 ET. According to data from the State Secretariat for Economic Affairs, the unemployment rate held steady at a seasonally adjusted 3.2% in May. The rate was forecast to fall to 3.1% from April’s initially estimated 3.3%. On an adjusted basis, the jobless rate dropped to 3.1% in May from 3.3% in April.
Following the jobless data, at 03:15 ET, the Federal Statistics Office reported that Swiss CPI for May increased 0.2% month-over-month, unchanged from the prior reading and slightly above consensus estimates for a reading at 0.1%. Year-over-year, CPI came in at 0.5%, versus expectations for a reading at 0.3% and a prior year-over-year reading at 0.4%.
Volatility has the potential to pick up considerably in today’s session, given the 07:45 ET release of the ECB’s latest policy statement, the UK election, as well as testimony from former FBI Director James Comey in front of the Senate Intelligence Committee.
Should these events put pressure on the dollar, resulting in a renewed decline in USD/CHF, key support is at the current downtrend low at 0.9614. A decline below this level would leave the target at the November 2016 low at 0.9549, which was established at the time of the US Presidential election.
Source: EconomicCalender
