Market News & Analysis
Scope for Further Downside on USD/CHF
Matt Simpson December 11, 2019 9:53 AM
USD/CHF rests on key support ahead of today’s FOC meeting. Yet once we get past the noise, we could see support give way.
In an earlier report we flagged that USD/CHF had struggled to close above parity since May, and that we were watching for its potential to roll over back within range. Whilst it teased us near the end of November with an intraday run for the October high, the upside was short live before it keeled over. Therefore, the record stands: the Swissy has not closed above parity since May. Moreover, it appears further downside could materialise.
We know that seasonally, December tends to be a bearish month for USD/CHF. And as its fallen -1.9% since the hammer high late November, it certainly on track to follow this seasonal pattern. But we also note that sight deposits have been falling in recent weeks which can indicate SNB have been less inclined to intervene and weaken their currency, effectively giving traders a free pass at shorting other currencies against it. So, as we’re in a typically bearish month for USD/CHF, SNB appear less inclined to weaken the franc and the technicals appear bearish, perhaps short USD/CHF remains a contender.
Momentum since the hammer has been decisively bearish, and a minor last week places a lower high at 0.9918. Prices are consolidating in a narrow range at key support, although that’s to be expected ahead of an FOMC meeting. Given the clear momentum shift from parity, the path of least resistance points lower.
- Bias remains bearish below 0.9918
- Keep today’s FOMC meeting on your radar as USD could rebound if the Fed are neutral (or simply not dovish). Although we suspect this will be short lived against CHF anyway, so may provide an opportunity to fade whilst it remains below 0.9918.
- Interim target is 0.9798, follows by 0.78 and 0.9715
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.