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Screenshot of a breaking news alert e-mail from Q2 2017
US financial markets are priced at 83% probability for a June rate hike, based on the fed funds futures market, but for later dates the curve is still under the Federal Open Market Committee’s “dot plot”. That could change quickly if Friday’s CPI update shows core inflation moving back above 2% after dipping in the year to March 31.
Meanwhile, the Swiss National Bank will be pleased to see the CHF weakening against the USD and EUR recently but not pleased enough to change its target interest rate. The three-month Swiss Libor is being held close to minus 0.75%. However, the decline will give it an opportunity to ease off FX market intervention if it continues.
The US dollar has rallied very nicely this week and in addition to its bullish wave structure has just completed a four-month Inverse Head and Shoulders reversal, with an upside objective of 1.0370.
Neckline support now lies around the 1.0045 level and this should hold if the dollar is to extend its advance (without the risk of a deeper corrective reaction).
Entry: today: USDCHF is seen as a buy at market (1.0085).
Stop: just under 1.0040, initially.
Time horizon: allow several weeks for target to be met.
USDCHF daily (click to expand)
USDCHF weekly (click to expand)
– Edited by Gayle Bryant