- The Swiss Franc (CHF) benefited from the US-China tussle over the Hong Kong bill.
- Uncertainty surrounding Brexit, doubts over global growth adds to the risk-off mood.
- US data, Fedspeak and trade/political headlines will be the key to follow.
With the latest risk aversion supporting the Swiss Franc, USD/CHF pulls back to 0.9980 by the press time of early Wednesday.
Among many, the key reason for the present risk-off can be ascertained to the US-China tussle over the Hong Kong bill that was recently passed by the United States’ (US) House of Representatives. Even if the same is yet to cross the Senate in order to become a law that requires the US to check Hong Kong’s sovereignty on an annual basis, China has already warned its to-be trading partner to stay away from internal matters.
The bill is likely to add to the fears of another failed round of trade talks between the US and China, which in turn could weigh on the global economy. It should be noted that the International Monetary Fund (IMF) recently cut down global growth forecast to the lowest since the Great Financial Crisis (GFC) citing trade pessimism as the key reason.
Other than trade worries, doubts over the Brexit, expectations of further easing by China and a rate cut from the Bank of Korea, add weakness to the pair.
Traders will now keep a close tab on the trade/political headlines while also not missing on the US Retail Sales and Fedspeak for predicting near-term pair moves.
Technical Analysis
FXstreet Analyst Haresh Menghani holds near-term bullish bias considering a two-month-old rising channel. However, chances of immediate pullback can’t be denied:
"Given the pair's repeated bounce from a support marked by the lower end of a two-month-old ascending trend-channel, the near-term bias remains tilted in favour of bullish traders. Moreover, technical indicators on hourly charts have been losing positive momentum but maintained their bullish bias on the daily chart, supporting prospects for some dip-buying interest. Hence, any meaningful slide might still be seen as an opportunity to initiate some fresh bullish positions near the mentioned trend-channel support, currently near the 0.9935 region. Meanwhile, a sustained strength beyond the parity mark might prompt some technical buying and accelerate the momentum further towards the recent swing highs near the 1.0025-30 region."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.