CHF rises as speculators cover short position

Arnaud Masset Swissquote Bank Ltd

USD/CHF has completely collapsed last week as it fell as much as 2.60%, sliding from 1.0015 to 0.9755, following the Jerome Powell’s dovish performance during the last FOMC press conference. The fall in US interest rates has suppressed one of the last strong incentive for investors to hold the greenback, making it less expensive to short. Overall, safe havens assets have increased more than average against the buck, with the Swissie, yen and gold leading the pack. Excluding last January flash crash in the yen, USD/JPY fell to the lowest level since April 2018, while the yellow metal broke the $1,400 threshold to the upside - rising a 6-year high - which suggests that investors feel increasingly uneasy with the current economic situation and equity valuations.

Looking at speculators’ positioning, one notice that net short CHF positions continued to decrease last week, falling from 34% of total open interest to 26%. Similarly, net short JPY positions decreased to 13% from 26% a week ago.

Stay on top of the markets with Swissquote’s News & Analysis

The situation will remain tense until at least the G20 meeting that takes place on June 28-29. Investors hope that Trump and Xi will find an agreement that could put an end to the ongoing trade war between the two world’s largest economies. However, we believe that even in that case markets won’t return to normal as President Trump would bring its trade war to Europe. Be ready for a shaky summer.

Author

Arnaud Masset

Swissquote Bank Ltd

Arnaud Masset is a Market Analyst at Swissquote Bank. He has a strong technical background and also works in the development of quantitative trading strategies.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.