EUR/CHF loses steam after solid start to the week
Market Brief
It was another quiet trading session in the FX market as investors seemed reluctant to take directional exposure ahead of this afternoon's key US data. Like other G10 currencies, the Japanese yen traded within a tight range on Thursday. USD/JPY moved within 104.30 and 104.70, stuck below the 105 resistance level. With an interest rate hike in the US now completely priced in, we believe that risk is to the downside in USD/JPY as yen bulls persist.
After falling as much as 3.55% since the beginning of the month, the euro treaded water at around 1.09 overnight. The strong support at 1.00822 (low from October 3rd) is still untouched, while on the upside the 1.12-1.13 area will act as resistance. Implied volatilities across various maturities remain very even though one-week implied vol ticked up slightly to 7.48%. Looking at the 25 delta risk reversal measure, we notice that the market has become less pessimistic regarding the single futures as traders reduce their downside protection. However, as confirmed by the CFTC speculative positioning, last week traders continued to bet on further euro weakness.
After rallying at a modest pace in the first sessions of the week, EUR/CHF stabilised at around 1.0835 and seemed ready to start moving south again. The strength of the Swiss franc will continue to give a headache to the Swiss National Bank, especially as Brexit talks gear up. The “implicit floor” at 1.08 will remain the strongest support as the SNB systematically intervenes in the FX market when EUR/CHF gets too close.
Asian equities were under pressure on Thursday as investors could not justify pushing company valuations higher. In Japan, the Nikkei was off 0.32%, while the broader Topix index edged down 0.05%. In mainland China, the Shanghai Composite fell 0.14% and the Shenzhen Composite edged down 0.06%. In Europe, equity futures followed the negative lead from Asia and slightly lower. The Footsie was down 0.32%, the DAX 0.27% and the SMI -0.63%.
Today traders will be watching unemployment rate from Spain; interest rate decision from Sweden and Norway; manufacturing and consumer confidence from Italy; UK GDP; durable goods orders, initial jobless claims, pending home sales and Fed’s Mersch’s speech from the US.
| Global Indexes | Current Level | % Change |
|---|---|---|
| Nikkei 225 Index | 17336.42 | -0.32 |
| Hang Seng Index | 23079.3 | -1.06 |
| Shanghai Index | 3111.83 | -0.14 |
| FTSE futures | 6904.5 | -0.32 |
| DAX futures | 10676.5 | -0.27 |
| SMI Futures | 7849 | -0.24 |
| S&P future | 2132.6 | -0.07 |
| Global Indexes | Current Level | % Change |
|---|---|---|
| Gold | 1268.46 | 0.12 |
| Silver | 17.62 | -0.04 |
| VIX | 14.24 | 5.79 |
| Crude wti | 49.32 | 0.28 |
| USD Index | 98.66 | 0.03 |
| Today's Calendar | Estimates | Previous | Country/GMT |
|---|---|---|---|
| SP Aug Total Mortgage Lending YoY | - | -12,60% | EUR/07:00 |
| SP Aug House Mortgage Approvals YoY | - | -14,90% | EUR/07:00 |
| SP 3Q Unemployment Rate | 19,30% | 20,00% | EUR/07:00 |
| TU Oct Economic Confidence | - | 87,8 | TRY/07:00 |
| SW Oct Consumer Confidence | 98,7 | 100,4 | SEK/07:00 |
| SW Oct Manufacturing Confidence s.a. | 101,9 | 101 | SEK/07:00 |
| SW Oct Economic Tendency Survey | 102,8 | 103 | SEK/07:00 |
| SW Sep Household Lending YoY | - | 7,50% | SEK/07:30 |
| SW oct..27 Riksbank Interest Rate | -0,50% | -0,50% | SEK/07:30 |
| RU Bloomberg Oct. Russia Economic Survey | - | - | RUB/07:30 |
| TU Central Bank Inflation Report | - | - | TRY/07:30 |
| TU Bloomberg Oct. Turkey Economic Survey | - | - | TRY/07:50 |
| NO oct..27 Deposit Rates | 0,50% | 0,50% | NOK/08:00 |
| EC Sep M3 Money Supply YoY | 5,10% | 5,10% | EUR/08:00 |
| IT Oct Consumer Confidence Index | 108,6 | 108,7 | EUR/08:00 |
| IT Oct Manufacturing Confidence | 102,2 | 101,9 | EUR/08:00 |
| IT Oct Economic Sentiment | - | 101 | EUR/08:00 |
| TU Sep Foreign Tourist Arrivals YoY | - | -38,00% | TRY/08:00 |
| IT Visco, Padoan Speak at World Saving Day Event in Rome | - | - | EUR/08:15 |
| NO Norges Bank Holds Rate Decision Press Conference | - | - | NOK/08:30 |
| UK 3Q A GDP QoQ | 0,30% | 0,70% | GBP/08:30 |
| UK 3Q A GDP YoY | 2,10% | 2,10% | GBP/08:30 |
| UK Aug Index of Services MoM | 0,10% | 0,40% | GBP/08:30 |
| UK Aug Index of Services 3M/3M | 0,80% | 0,60% | GBP/08:30 |
| IT Sep Hourly Wages MoM | - | 0,00% | EUR/09:00 |
| IT Sep Hourly Wages YoY | - | 0,60% | EUR/09:00 |
| SA Sep PPI MoM | 0,20% | -0,10% | ZAR/09:30 |
| SA Sep PPI YoY | 7,10% | 7,20% | ZAR/09:30 |
| UK Oct CBI Retailing Reported Sales | -2 | -8 | GBP/10:00 |
| UK Oct CBI Total Dist. Reported Sales | - | 17 | GBP/10:00 |
| BZ Sep National Unemployment Rate | 11,90% | 11,80% | BRL/11:00 |
| TU oct..21 Foreigners Net Stock Invest | - | $17m | TRY/11:30 |
| TU oct..21 Foreigners Net Bond Invest | - | -$311m | TRY/11:30 |
| TU Aug House Price Index YoY | - | 13,98% | TRY/11:30 |
| TU Aug House Price Index MoM | - | 1,65% | TRY/11:30 |
| BZ Sep Tax Collections | 95014m | 91808m | BRL/12:00 |
| AS Austrian Central Banker Ewald Nowotny Speaks in Cyprus | - | - | EUR/12:00 |
| US Sep P Durable Goods Orders | 0,00% | 0,10% | USD/12:30 |
| US Sep P Durables Ex Transportation | 0,20% | -0,20% | USD/12:30 |
| US Sep P Cap Goods Orders Nondef Ex Air | -0,10% | 0,90% | USD/12:30 |
| US Sep P Cap Goods Ship Nondef Ex Air | 0,30% | -0,10% | USD/12:30 |
| US oct..22 Initial Jobless Claims | 255k | 260k | USD/12:30 |
| US oct..15 Continuing Claims | 2052k | 2057k | USD/12:30 |
| RU oct..21 Gold and Forex Reserve | - | 391.4b | RUB/13:00 |
| AS Austrian Central Bank Governor Ewald Nowotny Speaks in Cyprus | - | - | EUR/13:00 |
| US oct..23 Bloomberg Consumer Comfort | - | 41,3 | USD/13:45 |
| US Sep Pending Home Sales MoM | 1,00% | -2,40% | USD/14:00 |
| US Sep Pending Home Sales NSA YoY | 4,00% | 4,00% | USD/14:00 |
| US Oct Kansas City Fed Manf. Activity | 3 | 6 | USD/15:00 |
| BZ Sep Central Govt Budget Balance | -23.6b | -20.3b | BRL/16:30 |
| EC ECB's Mersch Speaks in Hachenburg, Germany | - | - | EUR/17:00 |
| SK Nov Business Survey Non-Manufacturing | - | 75 | KRW/21:00 |
| SK Nov Business Survey Manufacturing | - | 75 | KRW/21:00 |
| EC SSM Board Member Dombret Speaks in Sao Paulo | - | - | EUR/21:30 |
Currency Tech
EURUSD
R 2: 1.1352
R 1: 1.1058
CURRENT: 1.0908
S 1: 1.0822
S 2: 1.0711
GBPUSD
R 2: 1.2857
R 1: 1.2477
CURRENT: 1.2212
S 1: 1.2090
S 2: 1.1841
USDJPY
R 2: 111.45
R 1: 107.49
CURRENT: 104.61
S 1: 102.80
S 2: 100.09
USDCHF
R 2: 1.0328
R 1: 1.0093
CURRENT: 0.9933
S 1: 0.9632
S 2: 0.9522
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
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.
