Trade of the Day - USDCHF
USD: Factory orders fell 0.1% in August, while orders excluding transportation were flat. Initial jobless claims rose 4k to 219k and the Challenger job cuts fell 24.8% yoy in September. Fed rhetoric remains diverse - Evans said that he’s very concerned about inflation, hence he’s open about the next rate cut even though the US economy should grow by around 2.25% this year with inflation just under 4%, whilst Kaplan opined that the two rate cuts so far have helped to “reduce the likelihood of a very severe slowdown but doesn’t eliminate it” so he prefers to move “sooner rather than later.'' Clarida also noted that the Fed will continue to discuss the standing repo facility, but nothing has been decided yet. Separately, President Trump is now suggesting that China should start an investigation into the Bidens.
CHF: The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook. Any signs of sustained risk liquidation, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately may not prove to be as effective as it once was, given where we're at in the monetary policy cycle.
From a technical and trading perspective I am anticipating that continued Dollar weakness from Tuesdays Year To Date high, with the test and failure at the yearly R1 pivot will start to weigh on the USDCHF, the three long tails are telling the market has now experienced multiple failures at the psychological 1.000 level, combined with the completion of a seven swing cycle, I now expect a corrective phase to develop as such I will venture short through yesterday's lows with a stop above todays highs targeting a move to test .9800 as support.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!