USD/CHF: Swiss Economy Shrinks And Remains Deep In Deflation
Growth Aces | Jun 09, 2015 06:59AM ET
GROWTHACES.COM Forex Trading Strategies
Taken Positions
EUR/USD: long at 1.1100, target 1.1400, stop-loss moved to 1.1175, risk factor **
GBP/USD: long at 1.5245, target 1.5420, stop-loss moved to 1.5250, risk factor ***
USD/CHF: short at 0.9410, target 0.9185, stop-loss moved to 0.9350, risk factor ***
EUR/GBP: long at 0.7260, target 0.7450, stop-loss moved to 0.7320, risk factor ***
EUR/CAD: long at 1.3800, target 1.4100, stop-loss moved to 1.3900, risk factor **
EUR/JPY: long at 140.00, target 142.00, stop-loss 139.00, risk factor **
CHF/JPY: long at 133.60, target 135.20, stop-loss 132.60, risk factor **
Pending Orders:
AUD/USD: buy at 0.7600, if filled - target 0.7800, stop-loss 0.7500, risk factor ***
EUR/CHF: buy at 1.0440, if filled - target 1.0680, stop-loss 1.0375, risk factor **
AUD/JPY: buy at 95.00, if filled – target 97.50, stop-loss 94.00, risk factor ***
EUR/USD Recovered From Post-Payrolls Losses
(stay long)
- Eurostat confirmed that GDP in the Eurozone in the January-March period rose 0.4% qoq for a 1.0% yoy gain - in line with market expectations. Household consumption contributed the most - 0.3 percentage points to the overall quarterly result. Investment added a further 0.2 percentage point and growing inventories and government spending another 0.1 point each. But the contribution from external trade was negative as imports grew twice as fast as exports on a quarterly basis. The Eurozone's biggest economy Germany grew 0.3% qoq, second biggest France expanded 0.6% qoq, third biggest Italy 0.3% qoq and fourth biggest Spain surged 0.9% qoq.
- European Central Bank governing council member Christian Noyer said the exchange rate between the USD and the EUR has been in ranges that are fully explainable by the difference in conditions in the United States and Europe and should not warrant significant questions.
- The USD was on a weaker footing on yesterday, unwinding all of its post-payrolls gains, in line with our expectations. We raised the target of our long EUR/USD position to 1.1400. The 1.1380 high on June 4 will be a key resistance level for the currency bulls. The EUR/USD rose as high as 1.1345 today, helped by elevated German Bund yields.
- Greece's ongoing talks to reach an agreement with its lenders continued to make investors wary, and would likely cap the EUR rise. Greek officials met on Monday with EU Economics Commissioner Pierre Moscovici on what reforms Greece must implement to get new loans, but there was no new proposal from Athens to which its creditors could agree to. Greek Prime Minister Alexis Tsipras said yesterday: “I believe we are very close to agreement on the primary surplus for the next few years. All it requires is a positive attitude to alternative proposals to pension cuts and the imposition of recessive measures. Our goal is measures that contain an element of redistribution and social justice.”
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Significant technical analysis' levels:
Resistance: 1.1345 (high Jun 9), 1.1380 (high Jun 4), 1.1450 (high May 18)
Support: 1.1111 (10-dma), 1.1083 (low Jun 4), 1.1049 (low Jun 5)
GBP/USD Failed To Rise Despite Good Economic Figures
(stay long)
- The Office for National Statistics said Britain's total trade deficit narrowed to 1.202 GBP billion in April from an upwardly revised GBP 3.093 billion in March. The deficit in goods alone narrowed to GBP 8.561 billion from GBP 10.705 billion and was the lowest since March last year.
- Britain's total trade deficit lopped 0.9 percentage points off quarterly economic growth in the first three months of this year, contributing to a disappointing overall expansion in gross domestic product of just 0.3%. Today’s data suggested that trade deficit might act as less of a brake on growth during the current quarter.
- The British Retail Consortium said the value of total retail sales increased by 1.1%, after a 1.3% fall in April when the year-on-year comparison was hit by the early timing of Easter.
- The GBP failed to rise significantly against the USD despite good macroeconomic figures. We raised the stop-loss level on our GBP/USD long to lock in profits. Better news are that the GBP remains weak against the EUR, in line with our EUR/GBP long position.
Significant technical analysis' levels:
Resistance: 1.5374 (hourly high Jun 9), 1.5441 (high Jun 4), 1.5475 (high May 26)
Support: 1.5191 (low Jun 5), 1.5176 (100-dma), 1.5170 (low Jun 1)
USD/CHF: Swiss Economy Shrinks And Remains Deep In Deflation
(stay short)
- Swiss consumer prices fell in May by 1.2% yoy, slightly more than the 1.1% yoy fall seen in the previous month. The Swiss National Bank removed its cap on the CHF, set at 1.20 per EUR, on January 15.
- The CHF subsequent surge has lowered the price of imports into Switzerland from the Eurozone. In March, the SNB slashed its inflation forecast and is now predicting prices to fall this year and in 2016.
- The Swiss unemployment rate fell to a non-seasonally adjusted 3.2% in May from 3.3% in the previous month.
- The Swiss National Bank policy meeting is scheduled for June 18. Central bank’s chairman Thomas Jordan said many times the CHF was too strong but should weaken. He said also that the bank was ready to intervene in foreign exchange markets if necessary, to influence the currency.
- The market continues to ignore weak data from Swiss economy. Let us remind that Swiss GDP fell by 0.2% qoq in the first quarter, steeper than it was forecast. The market ignores also comments from the central bank and we see the CHF appreciating against the USD and quite strong against the EUR.
- Our short-term USD/CHF strategy is to stay short, but too strong CHF will be a disaster for the economy in the long run. That is why we expect rises in the EUR/CHF and the USD/CHF in the long term.
Significant technical analysis' levels:
Resistance: 0.9502 (high Jun 5), 0.9534 (200-dma), 0.9543 (high May 27)
Support: 0.9252 (hour low Jun 9), 0.9188 (76.4% of 0.9079-0.9543), 0.9100 (psychological level)
Source: Growth Aces Forex Trading Strategies
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