USD Rallies As Congress Debates Impeachment
Shain Vernier • 2 min read
Today, the U.S. House of Representatives is scheduled to vote on a second impeachment of President Donald Trump. The move is expected to gain House approval as only a simple majority is needed. Upon being passed, the motion will then move to the Senate where it is expected to fail. Amid the political rhetoric, the USD is putting in a solid session vs the majors. Big movers are the USD/CAD (-0.19%), EUR/USD (-0.28%), and AUD/USD (-0.25%).
On the traditional economic news front, U.S. CPI (Dec.) was this morning’s headliner. Here’s a quick look at the session’s key metrics:
- U.S. CPI (Dec.) came in as expected at 0.4%. This figure was above November, which came in at 0.2%.
- Core CPI (Dec.) came in on schedule at 0.1%, below November’s figure of 0.2%.
All in all, December’s inflation metrics brought few surprises. In addition to the CPI figures, FOMC Member Lael Brainard issued public comments regarding current FED policy. Here are a few of the highlights:
- “We [FED] are strongly committed to achieving our maximum-employment and average inflation goals.”
- “The economy is far away from our goals in terms of both employment and inflation. Even under an optimistic outlook, it will take time to achieve substantial further progress.”
- “I expect that the current pace of [FED] purchases will remain appropriate for quite some time.”
Add it up: the FED is going to remain devoted to dovish policy for the intermediate future. Even though American equities are at all-time highs, it looks like at least 2 more quarters of patently accommodative FED policy is on the way.
At press time, a second Trump impeachment is in the works. For the USD/CHF, the news cycle has meant whipsaw trade and a noncommittal tone.
USD/CHF Tight Ahead Of Impeachment #2
Thus far, 2021 has been a decent period for the USD/CHF. Rates are well off yearly lows and holding in a bullish daily pattern.
Here are the levels to watch going into tomorrow’s session for the USD/CHF:
- Support(1): Bollinger MP, 0.8858
- Support(2): Daily SMA, 0.8847
- Support(3): 62% Current Wave Retracement, 0.8819
Bottom Line: At this point, it looks like traders are tired of hearing about impeachment. With only one week to go until Joe Biden assumes the White House, a Trump departure has already been priced into the markets.
If we see the USD/CHF fall from present levels, a buying opportunity may come into play. For the rest of the week, I’ll have buy orders in the queue from 0.8826. With an initial stop loss at 0.8789, this trade produces 37 pips on a standard 1:1 risk vs reward ratio.