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USDCHF SIGNAL 19-10-2022 : USDCHF trades with modest gains around mid-0.9900s, lacks follow-through

USDCHF SIGNAL

USDCHF SIGNAL : USDCHF trades with modest gains around mid-0.9900s, lacks follow-through

  • USD/CHF edges higher on Wednesday amid a modest pickup in the USD demand.
  • Hawkish Fed expectations, elevated US bond yields act as a tailwind for the buck.
  • The risk-on mood undermines the safe-haven CHF and offers support to the pair.

USDCHF SIGNAL : The USD/CHF pair attracts some buying near the 0.9925-0.9930 area on Wednesday and moves away from a one-week low touched the previous day. The pair is currently trading around the mid-0.9900s, though the modest intraday uptick lacks bullish conviction.

The prospects for a more aggressive policy tightening by the Fed assist the US dollar to regain some positive traction, which, in turn, is seen offering some support to the USD/CHF pair. The markets seem convinced that the Fed will continue to hike interest rates at a faster pace to tame inflation and have now priced in a nearly 100% chance of another supersized 75 bps increase in November.

The bets were reaffirmed by hotter US consumer inflation figures released last week and the recent hawkish remarks by several Fed officials. This remains supportive of elevated US Treasury bond yields and continues to act as a tailwind for the greenback. In fact, the yield on the rate-sensitive 2-year US government bond and the benchmark 10-year Treasury note stand tall near a multi-year peak.

USDCHF SIGNAL : Apart from this, the prevalent risk-on environment – as depicted by the follow-through rally in the equity markets – undermines the safe-haven Swiss francs and acts as a tailwind for the USD/CHF pair. Despite the supporting factors, spot prices, so far, have struggled to gain any meaningful traction. This, in turn, warrants some caution before positioning for any further appreciating move.

Nevertheless, the fundamental backdrop seems tilted in favour of bullish traders and suggests that the path of least resistance for the USD/CHF pair is to the upside. Traders now look to the US housing market data – Building Permits and Housing Starts – for a fresh impetus. This, along with the US bond yields, will drive the USD demand and produce short-term opportunities around the USD/CHF pair.

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FIRST CAPITALS brand is authorized and regulated in various jurisdictions.

First Capitals Limited (www.First Capitals.com/eu) is regulated by the Cyprus Securities and Exchange Commission with CIF license number 185/12, licensed by the Financial Sector Conduct Authority (FSCA) of South Africa, with FSP No. 46614. The company is also registered with the Financial Conduct Authority of the UK with number 600475.

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Card transactions are processed via FT Global Services Ltd, Reg No. HE 335426 and registered address at Ioannis Stylianou, 6, Floor 2, Flat 202 2003, Nicosia, Cyprus, and via Exinity Services Ltd , Reg No. HE 400404 and registered address at Agiou Georgiou Makri, 64, Anna Maria Lena Court, Flat 201, 6037, Larnaca, Cyprus. Address for cardholder correspondence: backoffice@First Capitals.com.. Business location address: FIRST CAPITALS Tower, 35 Lamprou Konstantara, Kato Polemidia, 4156, Limassol, Cyprus.

Exinity Limited is a member of Financial Commission, an international organization engaged in a resolution of disputes within the financial services industry in the Forex market.

Risk Warning: Trading Forex and Leveraged Financial Instruments involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Trading non-leveraged products such as stocks also involves risk as the value of a stock can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. It is the responsibility of the Client to ascertain whether he/she is permitted to use the services of the FIRST CAPITALS brand based on the legal requirements in his/her country of residence.  Please read FIRST CAPITALS’s full Risk Disclosure.

Regional restrictions: FIRST CAPITALS brand does not provide services to residents of the USA, Mauritius, Japan, Canada, Haiti, Suriname, the Democratic Republic of Korea, Puerto Rico, Brazil, the Occupied Area of Cyprus and Hong Kong. Find out more in the Regulations section of our FAQs.

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