This morning brought a collection of stronger-than-expected U.S. economic reports. As a result, stocks are on the march north and the Greenback is holding firm against the Swiss franc. While the civil unrest in the United States appears to be gaining momentum, it’s beginning to look like the worst of the COVID-19 economic fallout is over.
Although today’s American economic reports are far from rosy, they are an improvement over months past. Here’s a quick breakdown of the data:
Event Actual Projected Previous
ADP Employment Change (May) -2.760M -9.000M -19.557M
ISM Non-Manufacturing Employment Index (April) 31.8 35.8 30.0
ISM Non-Manufacturing PMI (April) 45.4 44.0 41.8
The headliners of this group are the massive improvement in ADP Employment and uptick in the ISM Non-Manufacturing PMI. These numbers suggest that things are heading back to normal as the COVID-19 contagion resides. Perhaps strengthening numbers will become a trend with the onset of summer.
Thus far today, the USD is on the move vs GOLD, the Japanese yen, and holding firm against the Swiss Franc. Let’s dig into the key levels and weekly technicals for the USD/CHF.
Swiss Franc Enters Consolidation Vs The USD
The past three sessions have brought tight trading conditions to the USD/CHF. Prices are hovering around the key 38% Retracement level (0.9626) in a non-committal fashion.
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Here are the key levels to watch in the USD/CHF for the remainder of the week:
- Resistance(1): Weekly SMA, 0.9658
- Support(1): 38% Retracement, 0.9626
Bottom Line: Although rates of the Greenback/Swiss franc are currently beneath Support(1) at 0.9626, the area from 0.9600-0.9575 is drawing bids to the market. If we see a rally from the 0.9600 handle, a shorting opportunity may come into play from the Weekly SMA (0.9658).
For the remainder of the week, I’ll have sell orders in the queue from 0.9654. With an initial stop loss located at 0.9676, this trade produces 20 pips on a slightly sub-1:1 risk vs reward ratio.
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