USD/CHF

The DAX finds itself at a 6-month low with Wall Street indices, with DAX futures also pointing to a weak open. Yields need to pull back for it to stand any chance of recovering, and if they do it may even take some steam out of the USD/CHF rally which is trying to tally up its 12th consecutive bullish day.

The US dollar was coming under a bit of pressure in the first half of Friday’s session, but after Thursday’s sharp rally it remained to be seen if the selling had any real momentum behind it. The Fed’s favorite inflation measure – core PCE – came in a touch softer but this was offset by a stronger-than-expected personal spending data. Investors were looking forward to another very busy week for macro data and central banks.

While it is down now, the US dollar outlook is subject to change depending on the outlook of the data.

The BOE and SNB are expected to hike by 25bp today. But a 50bp hike may not be out of the question, which puts GBP/USD and USD/CHF firmly onto trader's radars today.

The selling of financial stocks was triggered by Credit Suisse this time

USD/CHF has a strong correlation with the DXY. Therefore, if one wishes to trade a currency pair rather then the US Dollar Index, USD/CHF could be a good choice!

As long as the strong correlation holds between the DXY and USD/CHF, if the DXY continues higher, USD/CHF should move higher with it.

The key as to where USD/CHF goes next may be in the DXY.

The key as to where USD/CHF goes next may be in the DXY.

As long as the correlation holds, traders who don’t have access to trade copper can use USD/CHF as a proxy.

The central bank also said the franc is no longer overvalued; however, they stand ready to intervene in the fx market if necessary.