Published on Jun 15, 2023

Daily Analysis For USD/CHF 15-06-2023

USD/CHF Analysis

Key Points: -

· The USD/CHF pair is poised to break above the resistance level of 0.9040, driven by optimism stemming from a V-shaped recovery in the USD Index. The recent guidance provided on interest rates has given investors clarity, and now their attention is turning towards the upcoming US Retail Sales data.

· Swiss National Bank (SNB) Chairman Thomas Jordan has already stated that the negative effects of a low inflation environment are less significant than those of a highly-inflated scenario. This suggests that the SNB is more concerned about high inflation and may not take aggressive measures to counteract low inflation.

· If the USD/CHF pair manages to surpass the 0.9040 level, it could indicate further upward momentum. Investors will closely watch the US Retail Sales data to gauge the strength of consumer spending, which is a crucial component of economic growth. Positive data could support the USD and push the pair higher.

Today's Scenario: -

The USD/CHF pair is currently facing strong resistance near the immediate level of 0.9040 during the Asian session. The Swiss Franc is striving to continue its upward movement, supported by a solid recovery in the US Dollar Index (DXY).

S&P500 futures in Tokyo are showing slight losses as investors remain cautious about the potential impact of further interest rate hikes by the Federal Reserve (Fed) on the United States' economy. The US equity market experienced significant volatility on Wednesday, with initial optimism following the Fed's decision to hold off on tightening monetary policy fading after Fed Chair Jerome Powell confirmed the likelihood of two small interest rate hikes by the end of the year.

The USD Index has displayed a V-shaped recovery after reaching a new four-week low at 102.66. The hawkish guidance provided by the Fed has injected new life into the USD Index, and it is expected to continue gaining ground amidst cautious market sentiment.

With interest rate guidance clarified, investors are now shifting their focus to the monthly US Retail Sales data for May. The data is expected to show a contraction of 0.1% compared to the previous month's expansion of 0.4%. Given the significant decline in food and gasoline prices, a careful analysis of the Retail Sales report will be necessary to determine whether the contraction in retail demand is due to lower prices of essential goods or a sign of weakening economic resilience.

Despite expectations of further interest rate increases by the Swiss National Bank (SNB), the Swiss Franc bulls are struggling to counter the strength of the US Dollar. SNB Chairman Thomas J. Jordan has already stated that the central bank will not wait for inflation to rise before taking action, as the negative effects of a low inflation environment are much less severe than those of high inflation.

It is important to note that market conditions can evolve rapidly, and factors such as economic indicators, central bank policies, and geopolitical developments can significantly influence the movement of the USD/CHF pair.

Diagram of USD/CHF: -

Economic Events : -

Date Event Impact Currency

0:00 (United States) Fed Press Conference High USD

4:15 (New Zealand) GDP Growth Rate YoY Medium NZD

4:15 (New Zealand) GDP Growth Rate QoQ Medium NZD

5:20 (Japan) Foreign Bond Investment Low JPY

5:20 (Japan) Stock Investment by Foreigners Low JPY

5:20 (Japan) Machinery Orders YoY Medium JPY

5:20 (Japan) Machinery Orders MoM Medium JPY

5:20 (Japan) Imports YoY Low JPY

5:20 (Japan) Balance of Trade High JPY

5:20 (Japan) Exports YoY Medium JPY

5:30 (Euro Area) Eurogroup Meeting Medium EUR

7:00 (Australia) Consumer Inflation Expectations Low AUD

7:00 (Australia) Part Time Employment Chg Medium AUD

7:00 (Australia) Participation Rate Low AUD

7:00 (Australia) Full Time Employment Chg Medium AUD

7:00 (Australia) Unemployment Rate High AUD

7:00 (Australia) Employment Change High AUD

7:00 (Australia) RBA Bulletin Medium AUD

7:00 (China) PBoC 1-Year MLF Announcement Low CNY

7:00 (China) House Price Index YoY Medium CNY

7:30 (China) Unemployment Rate High CNY

7:30 (China) Retail Sales YoY High CNY

7:30 (China) Industrial Production YoY High CNY

7:30 (China) Fixed Asset Investment (YTD) YoY Medium CNY

9:05 (Japan) 3-Month Bill Auction Low JPY

10:00 (Japan) Tertiary Industry Index MoM Low JPY

10:00 (Netherlands) Unemployment Rate Medium EUR

10:30 (Finland) GDP YoY Low EUR

12:00 (Switzerland) Producer & Import Prices MoM Low CHF

12:00 (Switzerland) Producer & Import Prices YoY Low CHF

12:15 (France) Inflation Rate MoM Medium EUR

12:15 (France) Inflation Rate YoY Medium EUR

12:15 (France) Harmonised Inflation Rate MoM Low EUR

12:15 (France) Harmonised Inflation Rate YoY Low EUR

13:30 (Spain) Balance of Trade Medium EUR

14:10 (Spain) Obligacion Auction Low EUR

14:10 (Spain) Bonos Auction Low EUR

14:30 (Euro Area) Balance of Trade Medium EUR

14:30 (France) 5-Year OAT Auction Low EUR

14:30 (France) 3-Year OAT Auction Low EUR

14:30 (Greece) Construction Output YoY Low EUR

14:30 (Montenegro) Inflation Rate YoY Low EUR

14:30 (Montenegro) Harmonised Inflation Rate YoY Low EUR

14:30 (Montenegro) Inflation Rate MoM Low EUR

15:00 (Belgium) Construction Output YoY Low EUR

15:30 (France) 10-Year Index-Linked OAT Auction Low EUR

15:30 (Ireland) Balance of Trade Low EUR

16:00 (Portugal) Economic Activity YoY Low EUR

16:00 (Portugal) Private Consumption YoY Low EUR

17:45 (Canada) Housing Starts Medium CAD

17:45 (Euro Area) ECB Interest Rate Decision High EUR

17:45 (Euro Area) Marginal Lending Rate Low EUR

17:45 (Euro Area) Deposit Facility Rate High EUR

18:00 (Canada) Manufacturing Sales MoM Low CAD

18:00 (United States) Import Prices YoY Low USD

18:00 (United States) Export Prices YoY Low USD

18:00 (United States) Import Prices MoM Medium USD

18:00 (United States) Export Prices MoM Medium USD

18:00 (United States) NY Empire State Manufacturing Index Medium USD

18:00 (United States) Retail Sales YoY High USD

18:00 (United States) Retail Sales Ex Autos MoM High USD

18:00 (United States) Retail Sales MoM High USD

18:00 (United States) Philly Fed Business Conditions Low USD

18:00 (United States) Philly Fed Employment Low USD

18:00 (United States) Philly Fed CAPEX Index Low USD

18:00 (United States) Philly Fed Prices Paid Low USD

18:00 (United States) Philly Fed New Orders Low USD

18:00 (United States) Philadelphia Fed Manufacturing Index Medium USD

18:00 (United States) Jobless Claims 4-week Average High USD

18:00 (United States) Continuing Jobless Claims High USD

18:00 (United States) Initial Jobless Claims High USD

18:00 (United States) Retail Sales Ex Gas/Autos MoM High USD

18:15 (Euro Area) ECB Press Conference High EUR

18:30 (Belgium) Balance of Trade Low EUR

18:30 (Kosovo) GDP Growth Rate YoY Low EUR

18:45 (United States) Capacity Utilization Low USD

18:45 (United States) Manufacturing Production YoY Low USD

18:45 (United States) Industrial Production YoY Medium USD

18:45 (United States) Industrial Production MoM Medium USD

18:45 (United States) Manufacturing Production MoM Low USD

19:30 (United States) Business Inventories MoM Medium USD

19:30 (United States) Retail Inventories Ex Autos MoM Low USD

20:00 (United States) EIA Natural Gas Stocks Change Low USD

21:00 (United States) 8-Week Bill Auction Low USD

21:00 (United States) 4-Week Bill Auction Low USD

21:05 (United Kingdom) BoE Cunliffe Speech Low GBP

21:30 (Canada) 2-Year Bond Auction Low CAD

21:30 (United States) 15-Year Mortgage Rate Low USD

21:30 (United States) 30-Year Mortgage Rate Low USD

Buy Scenario: -

For a bullish reversal, buyers of USD/CHF would need to reclaim the 0.9000 level as a first step. This would open up the possibility of testing the confluence of the 20-day and 50-day EMAs at 0.9033/38, followed by the intersection of the 100-day EMA and the daily high from April 10 at 0.9114/20. Till we do not advise to buy USD/CHF.

Sell Scenario: -

The USD/CHF pair continued its downward trend after breaking below the 50-day and 20-day Exponential Moving Averages (EMAs) located at 0.9038 and 0.9033, respectively. As a result, the pair extended its losses, breaching the key psychological level of 0.9000 and reaching fresh three-week lows around 0.8965, with further downside potential towards 0.8970. To maintain the bearish momentum, the USD/CHF needs to surpass the previous swing low of 0.8940 from May 22, which would then expose the next support level around the psychological level of 0.8900.

Overall, the trend for USD/CHF remains bearish, supported by the readings of the oscillators. Both the Relative Strength Index (RSI) and the three-day Rate of Change (RoC) continue to indicate bearish territory, suggesting further downside potential for the pair. Till we do not advise to sell USD/CHF.