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FOREX: CHF Lags Following Bold SNB Cut, AUD Leads G10 Gains

FOREX
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  • The Swiss Franc has weakened following the SNB opting for a larger 50bp rate cut compared to consensus forecasts expecting a more moderate 25bp move. EURCHF rose around 65 pips to trade back above 0.93 and print a 0.9344 high on the session. Despite the initial spike, momentum then stalled and a late mention that the likelihood of negative rates has become smaller prompted a small reversal back to 0.9315.
  • USDCHF rose to a fresh two-week high of 0.8893, and the renewed strength sees us narrow the gap to the post-election highs of 0.8957. The 50-day EMA has supported the pair well here, with the dip following US NFP providing a good entry point to the broader trend.
  • Elsewhere, AUDUSD has risen 0.7% and trades back above 0.6400 on the solid jobs report overnight, where the unemployment rate fell back sub 4.0%, well below forecasts. This has underpinned the Aussie recovery, following AUDUSD printing a new one-year low below 0.6340 on Wednesday.
  • Mixed signals this week from the China signals, the RBA meeting and local data leaves AUDUSD just a touch firmer on the week, whereas AUDJPY remains ~2% in the green.
  • Higher core yields continue to weigh on the Japanese yen and contrast to the more dovish rhetoric surrounding the immediate steps for BOJ monetary policy. USDJPY made a brief test towards the post-US CPI highs around 152.80, however, subsequent CHFJPY supply has helped contain the price action.
  • Focus now turns to the ECB and EURUSD continues to oscillate around 1.0500, where notable levels of option expiries are found. A resistance at 1.0566, the 20-day EMA, remains intact - for now and initial support is at 1.0461, the Dec 2 low.
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  • The Swiss Franc has weakened following the SNB opting for a larger 50bp rate cut compared to consensus forecasts expecting a more moderate 25bp move. EURCHF rose around 65 pips to trade back above 0.93 and print a 0.9344 high on the session. Despite the initial spike, momentum then stalled and a late mention that the likelihood of negative rates has become smaller prompted a small reversal back to 0.9315.
  • USDCHF rose to a fresh two-week high of 0.8893, and the renewed strength sees us narrow the gap to the post-election highs of 0.8957. The 50-day EMA has supported the pair well here, with the dip following US NFP providing a good entry point to the broader trend.
  • Elsewhere, AUDUSD has risen 0.7% and trades back above 0.6400 on the solid jobs report overnight, where the unemployment rate fell back sub 4.0%, well below forecasts. This has underpinned the Aussie recovery, following AUDUSD printing a new one-year low below 0.6340 on Wednesday.
  • Mixed signals this week from the China signals, the RBA meeting and local data leaves AUDUSD just a touch firmer on the week, whereas AUDJPY remains ~2% in the green.
  • Higher core yields continue to weigh on the Japanese yen and contrast to the more dovish rhetoric surrounding the immediate steps for BOJ monetary policy. USDJPY made a brief test towards the post-US CPI highs around 152.80, however, subsequent CHFJPY supply has helped contain the price action.
  • Focus now turns to the ECB and EURUSD continues to oscillate around 1.0500, where notable levels of option expiries are found. A resistance at 1.0566, the 20-day EMA, remains intact - for now and initial support is at 1.0461, the Dec 2 low.