Sample Category Title

Daily Pivots: (S1) 0.9774; (P) 0.9876; (R1) 0.9940; More...

Intraday bias in EUR/USD remains on the downside at this point. Current down trend should target 100% projection of 1.0368 to 0.9863 from 1.0197 at 0.9692. Firm break there could prompt downside acceleration and target 161.8% projection at 0.9380. On the upside, above 0.9943 minor resistance will turn intraday bias neutral first. But outlook will stay bearish as long as 1.0197 resistance holds, in case of recovery.

In the bigger picture, down trend from 1.6039 (2008 high) is still in progress. Next target is 100% projection of 1.3993 to 1.0339 from 1.2348 at 0.8694. In any case, break of 1.0197 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish even with strong rebound.

Daily Pivots: (S1) 1.1209; (P) 1.1297; (R1) 1.1357; More...

A temporary low is formed at 1.1210 in GBP/USD and intraday bias is turned neutral first. Some consolidations could be seen. But upside of recovery should be limited below 1.1737 resistance. On the downside, break of 1.1210 will resume larger down trend to 61.8% projection of 1.3748 to 1.1759 from 1.2292 at 1.1063 next.

In the bigger picture, based on current momentum, fall from 1.4248 (2018 high) is probably resuming long term down trend from 2.1161 (2007 high). Sustained break of 1.1409 will target 61.8% projection of 1.7190 (2014 high) to 1.1409 (2020 low) from 1.4248 (2021 high) at 1.0675. This will remain the favored case for now as long as 1.2292 resistance holds.

Daily Pivots: (S1) 143.39; (P) 144.05; (R1) 144.74; More...

USD/JPY falls sharply today after hitting 145.89 and intraday bias is turned neutral first. Further rally will remain in favor as long as 139.37 resistance turned support holds. Break of 145.89 will resume larger rally to 147.68 long term resistance. However, decisive break of 139.37 will confirm short term topping, on bearish divergence condition in 4 hour MACD. Deeper decline would be seen back towards 130.38 support.

In the bigger picture, up trend from 101.18 is still in progress, as part of the whole up trend from 75.56 (2011 low). Further rise should be seen to 147.68 (1998 high). For now, break of 130.38 support is needed to be the first indication of medium term topping. Otherwise, outlook will stay bullish even in case of deep pull back.

Daily Pivots: (S1) 0.9623; (P) 0.9662; (R1) 0.9702; More

Intraday bias in USD/CHF stays on the upside for 0.9868 resistance first. Firm break there will argue that larger up trend is ready to resume through 1.0063. Overall, the corrective pattern from 1.0063 high could still extend. Below 0.9619 minor support will turn bias back to the downside for 0.9478 and below.

In the bigger picture, current development suggests that up trend from 0.8756 (2021 low) is still in progress. Sustained break of 1.0063 will target 100% projection of 0.9149 to 1.0063 from 0.9369 at 1.0283, and then 1.0342 (2016 high). For now, this will remain the favored case as long as 0.9369 support holds, even in case of deep pull back.

Extreme volatility was seen in the markets in the past 24 hours. Yen rebounds broadly today after Japan confirmed that "decisive" currency intervention was made. That came after BoJ stood pat and pledged to keep rate at low level. Swiss Franc was sold off sharply after SNB hiked 75bps, but hinted at the possibility of a pause. Sterling is mildly firmer after BoE delivered 50bps rate hike, with split votes among policymakers. For now, Yen is the strongest one for the week, followed by Dollar, and then Aussie. Kiwi is still the worst, followed by Swiss Franc and Euro.

Technically, it's still a bit early to conclude that Yen is reversing course. A focus is on USD/JPY's reaction to 139.37 resistance turned support. As long as this level holds, there is chance of another take on 1998 high at 147.68. However, sustained break of 139.37 will argue that a medium term top was already formed and deeper correction could be seen back towards 130.38 support as traders unwind positions.

In Europe, at the time of writing, FTSE is down -0.28%. DAX is down -0.71%. CAC is down -0.77%. Germany 10-year yield is down -0.0137 at 1.878. Earlier in Asia, Nikkei dropped -0.58%. Hong Kong HSI dropped -1.61%. China Shanghai SSE dropped -0.27%. Singapore Strait Times rose 0.04%. Japan 10-year JGB yield dropped -0.0163 to 0.245.

US initial jobless claims rose to 213k, below expectation

US initial jobless claims rose 5k to 213k in the week ending September 17, below expectation of 220k. Four-week moving average of initial claims dropped -6k to 217k.

Continuing claims dropped -22k to 1379k in the week ending September 10. Four-week moving average of continuing claims dropped -8k to 1405k.

BoE hikes 50bps, 3 members want 75bps, one want 25bps

BoE raises Bank rate by 50bps to 2.25% as widely expected. The voting was not unanimous, with five MPC members Andrew Bailey, Ben Broadbent, Jon Cunliffe, Huw Pill, and Silvana Tenreyro, voted for the decisions. Three members, Jonathan Haskel, Catherine L Mann and Dave Ramsden voted for 75bps hike. One member, Swati Dhingra, voted or 25bps hike.

The Committee voted unanimous to reduce the stock of purchased government bonds by GBP 80B over the next 12 months, to a total of GBP 758B, as set out in August meeting minutes.

BoE also said that the MPC will consider and make decision on the Bank Rate "at each meeting". The scale, pace and timing of any further changes will reflect the assessment of economic outlook and inflationary pressures. It maintain the pledge to "respond forcefully" if outlook suggests "more persistent inflation pressures".

SNB hikes 75bps, signalling possibility of a pause

SNB raises policy rate by 75bps to 0.50% as widely expected, to counter "renewed rise in inflation pressure". It "cannot be ruled out" that further rate hikes will be "necessary". The reference to the time of "in the foreseeable future" was dropped.

SNB expects that inflation is "likely to remain at an elevated level for the time being". Based on the assumption that policy stays at 0.50% over the entire forecast horizon, inflation will peak at 3.4% in Q3, and stay slowing from Q2 2023 to 1.6% in Q2 2024. Inflation will average 3.0% in 2022, 2.4% in 2023, and then 1.7% in 2024.

Regarding the economy, SNB expects GDP growth of around 2% this year, roughly 0.5% lower than the last monetary policy assessment. Uncertainty remains high and the biggest risks are a "a global economic downturn, a worsening of the gas shortage in Europe and a power shortage in Switzerland".

Yen rebounds as Japan confirmed decisive intervention action taken

Yen reversed earlier decline and rebounded strongly, after a top currency diplomat confirmed that the government have intervened in the foreign exchange market for the first time since 1998. Masato Kanda, vice finance minister for international affairs, told reporters, "we have taken decisive action" on in the markets.

Finance Minister Shunichi Suzuki declined to disclose how much authorities had spent buying yen and whether other countries had consented to the move. But Kanda said Japan has "good communication" with the US.

BoJ stands part, interest rate to remain at present or lower levels

BoJ kept monetary policy unchanged as widely expected. Under the yield curve control framework, short-term policy interest rate is held at -0.10%. BoJ will continue to purchase Japanese government bonds, without setting an upper limit, to keep 10-year JGB yield at around 0%. Also, BoJ will offer to purchase 10-year JGBs at 0.25% every business day through fixed -rate purchase operations, to cap the upside. These decisions were made by unanimous vote.

BoJ also pledge to continue with Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control to achieve 2% price target, "as long as it is necessary for maintaining that target in a stable manner". The bank will not hesitate to take additional easing measures if necessary". It expects short- and long-term policy interest rates to "remain at their present or lower levels".

Governor Haruhiko Kuroda confirmed that "There's absolutely no change to our stance of maintaining easy monetary policy for the time being. We won't be raising interest rates for some time."

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9623; (P) 0.9662; (R1) 0.9702; More

Intraday bias in USD/CHF stays on the upside for 0.9868 resistance first. Firm break there will argue that larger up trend is ready to resume through 1.0063. Overall, the corrective pattern from 1.0063 high could still extend. Below 0.9619 minor support will turn bias back to the downside for 0.9478 and below.

In the bigger picture, current development suggests that up trend from 0.8756 (2021 low) is still in progress. Sustained break of 1.0063 will target 100% projection of 0.9149 to 1.0063 from 0.9369 at 1.0283, and then 1.0342 (2016 high). For now, this will remain the favored case as long as 0.9369 support holds, even in case of deep pull back.

Economic Indicators Update

US initial jobless claims rose 5k to 213k in the week ending September 17, below expectation of 220k. Four-week moving average of initial claims dropped -6k to 217k.

Continuing claims dropped -22k to 1379k in the week ending September 10. Four-week moving average of continuing claims dropped -8k to 1405k.

Full release here.

CHFJPY lost almost 2.0% within two hours during Thursday’s European trading hours, plunging to a two-week low of 143.92 before edging slightly higher.

The technical oscillators followed the price sharply lower, with the RSI sliding below its 50 neutral threshold and the MACD easing below its red signal line. The bullish market structure, however, remained intact within the upward-sloping channel, preserving some buying interest. Note that the stochastics are hovering near their 20 oversold level. Hence, an upside reversal at the channel's lower band cannot be excluded.

If the channel’s support trendline at 143.18 cracks, however, shifting the outlook back to neutral in the three-month picture, the spotlight will fall on the Ichimoku cloud’s surface at 141.15 and the 140.30 restrictive zone. Additional losses from here could squeeze the price directly to 138.50, where the 38.2% Fibonacci retracement of the 117.52-151.40 upleg is placed.

In the positive scenario, where the pair closes above the 20-day SMA at 146.25, buying orders could grow all the way to the 148.93 resistance. Higher, the bulls might attempt to pierce through the 151.40 top and challenge the channel’s surface around 152.80.

Summarizing, although CHFJPY is facing a bearish bias, selling pressures can be considered temporary as long as the price trades above 143.40.

As expected, the Bank of England hiked interest rates by 0.50%, bringing the cash rate to 2.25%. There was an outside chance that the BoE would press the rate pedal to the floor and deliver a 0.75% increase, but in the end, members decided unanimously on a less aggressive hike. The central bank is grappling with 9.9% inflation and a falling British pound, which means that more large hikes are likely coming. The British pound has edged higher and is trading at 1.1287.

With the rate decision out of the way, the markets will focus on UK releases, which are expected to be soft. Later today, GfK Consumer Confidence, which has been in a deep freeze, is projected to tick up to -42, up from -44. The week wraps up with Manufacturing and Services PMIs on Friday. Manufacturing PMI is expected to rise to 47.5, up from 47.3, while Services PMI is projected to slow to 50.0, down from 50.9.

Fed raises rate by 0.75%

The Federal Reserve delivered a third straight hike of 0.75% on Wednesday, raising the benchmark rate to 3.25%. This was largely expected, although there was a possibility that the hawkish Fed might raise rates by a full point. The Fed’s decision was a “hawkish 0.75% hike”, which gave the US dollar a significant boost, as GBP/USD plunged 1.01% on Wednesday and closed below the 1.13 line.

The Fed sent a clear message that it plans to remain aggressive, as inflation has proven much more persistent than anticipated. August inflation fell from 8.5% to 8.3%, but this was higher than the forecast of 8.1% and only reinforced the Fed’s hawkish stance. Fed Chair Powell left the door wide open for yet another 0.75% increase in November, and unless inflation shows a dramatic drop, December is likely to bring a hike of 0.50% or 0.75%. With the benchmark rate now above the neutral rate of 2.50%, additional hikes will likely lead to a recession, but this is a price the Fed is willing to pay in order to curb red-hot inflation.

GBP/USD Technical

• GBP/USD is testing resistance at 1.1269. Next, there is resistance at 1.1384
• There is support at 1.1144 and 1.1061

The Swiss franc is sharply lower today, after the Swiss National Bank raised rates by 0.75%. In the European session, USD/CHF is trading at 0.9834, up an impressive 1.79% on the day.

SNB sends rates into positive territory

There were no surprises from the SNB, which delivered a sharp 0.75% rate hike today,  bringing the benchmark rate to 0.25%. This follows a 0.75% increase in June. Prior to these moves, the SNB had maintained its benchmark rate at -0.75% since 2015. Switzerland held the distinction of being the only European country with negative rates, but rising inflation has forced the SNB to follow other central banks and tighten policy.

Swiss inflation hit 3.5% in August, a dream figure for other central banks, many of which are grappling with inflation close to double digits. Still, this reading was the highest in 30 years, and the SNB felt compelled to respond forcefully in order to keep inflation at bay. The Bank’s policy statement noted the rise in inflation and that Switzerland’s GDP was lower than expected. The Swiss franc showed limited movement after the Fed rate hike on Wednesday but has plunged today after the SNB’s dramatic move.

Fed delivers 0.75% hike

The Federal Reserve raised interest rates by 0.75% on Wednesday for a third straight month, bringing the benchmark rate to 3.25%. This was largely expected, although there was a slight possibility that the Fed might raise rates by a full point. The Fed’s decision was a “hawkish 0.75% hike”, as the Fed sent a clear message that it will remain aggressive in order to stamp out inflation, even at the cost of a recession. Fed Chair Powell left the door wide open for yet another 0.75% increase in November, and unless inflation shows a dramatic drop, December is likely to bring a hike of 0.50% or 0.75%. With the benchmark rate now in restrictive territory, above the 2.50% neutral rate, the Fed will have to exercise great care with future rate increases.

USD/CHF Technical

• USD/CHF has pushed above resistance at 0.9711 and 0.9776. The next resistance line is 0.9892
• There is support at 0.9652 and 0.9530

BoE raises Bank rate by 50bps to 2.25% as widely expected. The voting was not unanimous, with five MPC members Andrew Bailey, Ben Broadbent, Jon Cunliffe, Huw Pill, and Silvana Tenreyro, voted for the decisions. Three members, Jonathan Haskel, Catherine L Mann and Dave Ramsden voted for 75bps hike. One member, Swati Dhingra, voted or 25bps hike.

The Committee voted unanimous to reduce the stock of purchased government bonds by GBP 80B over the next 12 months, to a total of GBP 758B, as set out in August meeting minutes.

BoE also said that the MPC will consider and make decision on the Bank Rate "at each meeting". The scale, pace and timing of any further changes will reflect the assessment of economic outlook and inflationary pressures. It maintain the pledge to "respond forcefully" if outlook suggests "more persistent inflation pressures".

Full statement here.