Dollar remains generally weak today after a rather weak recovery attempt. And, much better than expected ADP job data seems providing little inspiration. FOMC rate decision will be the main focus today but would likely be a non-event. Firstly, there practically no chance for Fed to adjust monetary policy at today’s meeting. Secondly, after some hawkish Fedspeaks back in January, there were a little speculation of a March hike. And Fed could make use of today’s statement to signal this. However, considering recent uncertainties in the financial markets after Donald Trump’s inauguration, there is now little chance for Fed to move in March neither. That include the domestic unrest due to immigration ban. Also, trade relationship with others as Trump extended his verbal attack to Germany and Japan. Fed could still be ready for three hikes this year as projected, provided that economic developments meet policy makers’ expectations. Their views would be more clearly presented in the next set of economic projections to be released in March. So in short, March FOMC meeting is the key, not today’s.
UK PMI manufacturing dropped 0.2 to 55.9 in January, met consensus. That compared to December’s 2.5 year high at 56.1. Market noted in the released that "manufacturing activity in the U.K. make a strong start to 2017, bolstering confidence over the British economy". And more importantly to the markets, "factories’ raw material costs rose at the fastest pace since PMI records began 25 years ago – fuelled by the pound’s near 20 percent drop against the dollar since June’s Brexit vote, as well as higher prices for steel and oil. In response, manufacturers raised the prices they charged for their goods at the fastest pace since April 2011." The surge in costs in line with recent solid inflation reading and add to the case for BoE to stand pat for the rest of the year. Also from UK, BRC shop price dropped -1.7% yoy in January. Nationwide house price rose 0.2% mom in January.
Also from Europe, Eurozone PMI manufacturing was revised up by 0.1 to 55.2 in January. Germany PMI manufacturing was revised down -0.1 to 56.4. France PMI manufacturing was revised up by 0.2 to 53.6. Italy PMI manufacturing dropped -0.2 to 53.0 in January. Swiss SVME PMI dropped to 54.6 in January, down from 56.0, below expectation of 55.9. Elsewhere. China manufacturing PMI dropped -0.1 to 51.3 in January, non-manufacturing PMI rose 0.2 to 54.6. New Zealand, employment rose 0.8% qoq in Q4, unemployment rate jumped to 5.2%.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 0.9907; (P) 0.9975; (R1) 1.0018; More…..
Intraday bias in USD/CHF remains on the downside for the moment as decline from 1.0342 is still in progress. Such fall is seen as the third leg of the pattern from 1.0327 and should now extend to 61.8% retracement of 0.9443 to 1.0342 at 0.9786 and below. On the upside, break of 1.0043 resistance is needed to indicate short term bottoming. Otherwise, outlook will stay mildly bearish in case of recovery.
In the bigger picture, rejection from 1.0327 resistance suggests that consolidation pattern from there is still in progress. Fall from 1.0342 is seen as the third leg and retest of 0.9443/9548 support zone could be seen. But we’d expect strong support from there to contain downside. At this point, we’re still expecting the larger rally to resume later to 38.2% retracement of 1.8305 to 0.7065 at 1.1359.
Economic Indicators Update
|21:45||NZD||Employment Change Q/Q Q4||0.80%||0.80%||1.40%||1.30%|
|21:45||NZD||Unemployment Rate Q4||5.20%||4.80%||4.90%|
|00:01||GBP||BRC Shop Price Index Y/Y Jan||-1.70%||-1.00%||-1.40%|
|01:00||CNY||Manufacturing PMI Jan||51.3||51.2||51.4|
|01:00||CNY||Non-manufacturing PMI Jan||54.6||54.5|
|07:00||GBP||Nationwide House Prices M/M Jan||0.20%||0.00%||0.80%|
|08:30||CHF||SVME PMI Jan||54.6||55.9||56|
|08:45||EUR||Italy Manufacturing PMI Jan||53||53.3||53.2|
|08:50||EUR||France Manufacturing PMI Jan F||53.6||53.4||53.4|
|08:55||EUR||Germany Manufacturing PMI Jan F||56.4||56.5||56.5|
|09:00||EUR||Eurozone Manufacturing PMI Jan F||55.2||55.1||55.1|
|09:30||GBP||PMI Manufacturing Jan||55.9||55.9||56.1|
|13:15||USD||ADP Employment Change Jan||246K||167K||153K||151K|
|15:00||USD||ISM Manufacturing Jan||55||54.7|
|15:00||USD||ISM Prices Paid Jan||66||65.5|
|15:00||USD||Construction Spending M/M Dec||0.30%||0.90%|
|15:30||USD||Crude Oil Inventories||2.8M|
|19:00||USD||FOMC Rate Decision||0.75%||0.75%|