USD Looking Good Against Safe-Havens

Posted Wednesday, October 24, 2018 by
Shain Vernier • 1 min read

In what has been another tough session for equities bulls, the USD has shown up well against safe-havens. Gains against the Swiss franc, Japanese yen, and a modest sell-off in gold have highlighted the trading day for the Greenback.

Aside from solid performance vs safe-havens, big drops in the EUR/USD and GBP/USD have placed an exclamation point on the day’s forex action. While intraday risk is certainly not “on” when it comes to U.S. stocks, the USD has become a preferred asset.

The pre-U.S market open brought another set of lagging U.S. real estate statistics. New Home Sales (Sept.) came in well below projections at -5.5%. This is due in part to the onset of fall as well as buyers and lenders becoming weary of coming policy from the newly hawkish FED.

In the eyes of many, one’s home is the ultimate safe-haven asset. However, given the recent spike in bond yields and aggressive FED policy, cash is quickly becoming king.

USD/CHF Technicals

The intermediate-term trend in the USD/CHF is intact and in full effect as we roll toward late-week trade. Rates are near par once again, trading at the top of the .9900-1.0000 value area.

USD/CHF, Daily Chart
USD/CHF, Daily Chart

Bottom Line: When it comes to psychological levels, they don’t get much bigger than par (1.0000) for the Swissie. I would equate par for the USD/CHF to 25,000 in the DJIA or $50.00 for WTI crude oil ― simply a big, round number that everyone in the world is watching.

From a technical standpoint, the 1.0000 area is a primed for scalping to the short. For the rest of the U.S. session, I will have sells queued up from .9997. Using an initial stop at 1.0004, this trade is good for 8-10 pips on a short-term rejection of par.

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