USD/CHF: Franc suffers longest losing streak since 1975 - MarketPulse

USD/CHF: Franc suffers longest losing streak since 1975 – MarketPulse

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  • Franc posts 11th straight daily decline versus the dollar
  • US consumer confidence falls to 4-month low
  • 10-year Treasury yield rises 1.2 bps to 4.546%

The relief rally was not meant to be for risky assets, but that didn’t seem to matter for USD/CHF.  The US dollar is rallying after consumer confidence fell to 4-month low, new home sales had their largest drop in almost a year, while S&P Corelogic Case-Shiller reported home prices rose to a record high. The economy sure looks like it might break, and it could easily get a lot worse if the Fed needs to take rates much higher.  The dollar is higher on both safe-haven flows and fears the Fed might not be done.  

JPMorgan CEO Dimon warned that the Fed might not be done raising rates, highlighting that he is not sure the world is prepared for 7% along with stagflation.  The Dow is having its worst day since March, and it won’t take a lot for momentum selling to heat up.  A government shutdown seems likely as lawmakers are nowhere close to agreeing on deep spending cuts and how much aid should go to Ukraine. A stopgap solution is losing momentum and it seems that House Speaker McCarthy might lose his position as hard-right Republicans are not budging. 

The worse the economic outlook becomes; the lower Fed rate hike odds should get but inflation is proving to be tricky here.  Wall Street won’t be able to say the peak is in place and that the disinflation process will remain if we are seeing record house prices, surging oil prices, and a surging dollar.

US Data

The economy is headed towards a rough patch if you believe the Conference Board’s latest consumer confidence report.  Given how high gas prices are becoming and the record prices it takes to buy a house, the consumer isn’t feeling too good.  Corporate stress is here and as credit conditions tighten further, the labor market is ready to weaken.  The Expectations survey plunged from 83.3 to 73.7, which is below the 80 level that typically signals a recession is coming.     

USD/CHF Daily Chart

USD/CHF (a daily chart of which is shown) as of Tuesday (9/26/2023) has been locked into a very strong bullish trend.  Price action is close to hitting 0.9161 level, which is the 38.2% Fibonacci retracement of the 1.0150 to 0.8550 downward move.  If bullish momentum remains intact key resistance lies at the 0.9350 level.  Major support lies at the 0.89o0 level.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA

With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya
Ed Moya

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