Greenback Continues To Rally Vs Swissy
Shain Vernier • 2 min read
Following a massive plunge last week, the Greenback is in the midst of a three-day winning streak vs the Swiss franc. Exchange rates of the USD/CHF are back above .9900 and within the intermediate-term value area between .9900 and 1.0000. Will the rally continue into Thursday or is it destined to fizzle?
Given the coming economic calendar, the answer to that question is anyone’s guess. During the Wednesday U.S. overnight session, the ECB is due to release its Deposit & Interest Rate Decisions. In addition, Thursday’s pre-Wall Street hours feature U.S. Non-Defense Capital Goods Orders (September). While it is a pretty sure bet the ECB will hold Deposit/Interest rates static, U.S. Capital Goods Orders may vary wildly. Analysts are expecting the number to strengthen from -0.4% to -0.2% month-over-month. However, given the recent variance in U.S. economic projections, anything can happen with this figure.
While tonight’s ECB decision may have a limited impact on the Swiss franc and Greenback, Brexit and impeachment proceedings wear on. In the event we see a shock headline from either arena, the recent USD/CHF downtrend is likely to quickly resume.
Greenback Holding Its Own Vs Safe-Havens
Today has been an interesting day on Wall Street with U.S. equities hovering near flat. Safe-haven currencies have lost ground vs the USD, yet gold is up about 0.50% on the session. Thus far, it has been a fairly dull day for the U.S. indices and risk-taking in general.
Here are two topside resistance levels to watch for the USD/CHF:
- Resistance(1): Daily SMA, .9927
- Resistance(2): Bollinger MP, .9930
Bottom Line: This week’s lack of fundamentals facing the Greenback has been a positive thing for valuations. Sometimes, no news is good news ― the past three days haven’t brought much in the way of market-moving headlines and rates are on the bull.
In the event we see the USD/CHF continue its march north, a short from inside the .9900-1.0000 value area is solid way to trade the action. Until elected, I will have sell orders in queue from .9924. With an initial stop at .9952, this trade produces 25 pips on a slightly sub-1:1 risk vs reward management plan.