- USD/CHF bears take a breather after the biggest daily fall in two weeks.
- Doubts about the previous risk-on mood, absence of major data/events join firmer yields to challenge USD/CHF bears.
- UK Chancellor Hunt-led market optimism fades as traders seek more clues to extend the week-start moves.
- Risk catalysts are more important for clear directions.
USD/CHF seesaws around 0.9950, after dropping the most in a fortnight, as bears seek more clues to extend the latest declines during Tuesday morning in Asia.
That said, the Swiss currency (CHF) pair tracked the broad US dollar moves, as well as the risk catalysts to portray the USD/CHF south-run amid an absence of major data/events. Other than the pause in the risk-on mood, hawkish Fed bets also put a floor under the USD/CHF prices. As per the latest readings of the CME’s FedWatch Tool, there are nearly 95% chance of a 75 bps Fed rate hike in November.
The reason could be linked to the British Finance Minister’s, also called Chancellor, reversal of earlier policy announcements boosted the market’s hope that London will overcome the impending market collapse. “Under the new policy, most of Truss's 45 billion pounds of unfunded tax cuts will go and the two-year energy subsidy scheme for households and businesses – expected to cost well over 100 billion pounds – will now be curtailed in April,” stated Reuters.
On the same line was the Bank of England’s (BOE) readiness for debt buybacks, starting November 07, as well as downbeat US data and receding hawkish bets on the BOE’s next move.
It’s worth noting that the US Dollar Index (DXY) dropped 1.09% while Wall Street also reversed Friday’s losses the previous day amid firmer sentiment. Additionally, the US Treasury yields marked mild gains after witnessing a downbeat start.
Talking about the data, NY Empire State Manufacturing Index for October dropped -9.5 versus -4.0 expected and -1.5 prior.
Looking forward, USD/CHF traders may witness lackluster trading amid a lack of major data/events, which in turn suggests the pair’s consolidation move, which in turn could renew the pair’s recovery.
Technical analysis
A six-week-old rising wedge bearish pattern restricts immediate USD/CHF moves between 0.9925 and 1.0085. That said, the looming bear cross on the MACD and sluggish RSI favor sellers.