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USD Shows Strength As Stocks Attempt Rebound

The USD has been a pleasant surprise for investors this week, as values have rallied across the majors. Big gains vs the Euro and Swiss franc have highlighted the action. For the second time this year, global investors are fleeing to the Greenback in search of security. 

With about a week to go until the November FED meeting, forex players are pricing uncertainty into the market at a huge rate. COVID-19 lockdowns and the election’s outcome have been driving the action all year long. However, this morning brought a major market mover with the release of Q3 GDP:

Event                                                       Actual                      Projected            Previous

Gross Domestic Product (Q3)               33.1%                         31.0%                 -31.4%

GDP Price Index (Q3)                              3.7%                           2.8%                   -2.1%

Today’s GDP figures were the highest on record and represented a 64% month-over-month jump. This is a massive uptick and one that was much-anticipated by the White House. In a tweet from earlier, Trump lauded the economic success:

“GDP number just announced. Biggest and Best in the History of our Country, and not even close. Next year will be FANTASTIC!!!”

It’s tough to deny that the U.S. economy is coming back strong from last spring’s COVID-19 shutdown. That’s one reason the USD is on the march. However, if more lockdowns ensue, then it’s anyone’s guess how the next 18 months are going to pan out.

USD Posts Nice Gains Vs The Swiss Franc

It’s been a big week for the USD/CHF, as rates have rallied above the 0.9150 level. At the moment, it appears that the 0.9000 handle has been successfully defended.

USD/CHF, Weekly Chart

Here are the key levels to watch going into Friday’s trade:

  • Resistance(1): Bollinger MP, 0.9284
  • Support(1): Weekly SMA, 0.9126

Bottom Line: If we see a pullback in the USD/CHF, a buying opportunity may come to pass. Until Friday’s close, I’ll have buy orders in the queue from 0.9128. With an initial stop loss at 0.9098, this trade produces 30 pips on a standard 1:1 risk vs reward ratio.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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