USD/CHF Moving In A Downward Channel

 | Apr 20, 2017 09:40AM ET


Let's stay away from the Brexit shenanigans and take a look at a more stable country's currency, shall we? USD/CHF investing caught my eyes as the pair broke below the daily that time they removed their currency cap that is.

The Swiss government reduced its outlook for the country's economic growth during 2017 in its latest forecast in March. However, their retail sales climbed for the first time in three months in February as reported beginning of April.

Their consumer price index and unemployment has remained unchanged, pretty much in the positive territory.

However the big headline for the Swiss has been currency manipulation. Switzerland has been named as one of six countries on the "monitoring list" in the U.S. Treasury's semi-annual currency report on potential foreign-exchange manipulators.

However the country quickly tried to put this into rest. Jorg Gasser, the country's state secretary for international financial matters said on Tuesday that Switzerland is not manipulating its currency.

So for now, any major moves in the pair for USD/CHF investing could be lead by the US dollar. Which brings up to the US fundamentals.

U.S. and A: Remains kinda mixed. Manufacturing conditions came out better than expected, in April. And so did their trade balance. However non-manufacturing PMI disappointed. And so did the Non-farm payrolls (NFP). In fact, the NFP surprised the economists so much that the USD dropped like a hot rock. Specifically, the U.S. economy only generated 98K jobs. This is obviously a very significant miss from the expected net increase of 175K.

Meanwhile US retail sales and consumer price index came in negative last Friday, pushing USD crosses further down on the forex dance floor. This was especially important because the Fed members have been looking at figures like this to justify their plans to raise their interest rates again this year.

This brings us to the second point of IDDA: Technical analysis.

2- Technical Points: USD/CHF Investing
The USD/CHF pair has been trading within a downward channel. It has not been able to break above the daily Ichimoku cloud in its most recent attempts in March and April. The Tenkan line has crossed below the Kijun line. And there was a massive bearish engulfing candlestick formed on Monday.