USD/CHF in focus with FOMC and SNB rate decisions looming
Fawad Razaqzada September 18, 2019 4:28 PM
The FOMC is widely expected to trim rates by 25 basis points later on today while the SNB is seen holding rates unchanged at -0.75% tomorrow morning.
The USD/CHF has arrived at a critical technical juncture around 0.9950 ahead of the US Federal Reserve and Swiss National Bank rate decisions. The FOMC is widely expected to trim rates by 25 basis points later on today while the SNB is seen holding rates unchanged at -0.75% tomorrow morning.
As my colleague Matt Weller wrote in his FOMC preview article earlier, the decision on interest rates is unlikely to be a big market mover in and of itself. Instead, traders will be keeping a closer eye on the central bank’s outlook for rates and the economy moving forward. Simply put, if the Fed conveys a dovish assessment of the economy then that would likely be bearish for the dollar while a hawkish outlook would be bullish, one would think.
Source: eSignal and FOREX.com.
Having broken a bearish trend line, the short term bias is technically bullish for the USD/CHF at the moment. However, rates have struggled to push further north of this 0.9950 region, with the 200-day moving average providing stiff resistance. The hesitation to move away from here is clearly understandable ahead of the two major central bank meetings, so this pair is one to watch for now.
If after the Fed meeting, the dollar resumes higher then the USD/CHF is perhaps one of the best pairs to trade for the buck bulls, given the fact that the SNB remains as one of the most dovish central banks out there, who is ready to intervene in the FX markets if the franc appreciates significantly.
However, if the dollar falls in response to the Fed’s decision today then in that case the dollar bears would be better off looking for opportunities elsewhere, with gold, for example, being a prime candidate due to growing geopolitical risks stemming from the Middle East.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.