USD/CHF rebounds after hitting YTD low amid risk-off impulse on US recession fears

Private hiring in February rose by 145K, lower than anticipated.
ISM Non-Manufacturing PMI drops to 51.2, below expectations and the previous month’s reading.
USD/CHF Price Analysis: Bullish continuation requires reclaiming 0.9100 resistance; otherwise, further losses lie below 0.9000.

Christian Borjon Valencia FXStreet

USD/CHF hits a new YTD low at 0.9005 but rebounds as a risk-off impulse, seeing a flight to safety, as shown by US equities trading in the red. Growing concerns in the United States (USD) arose after the last tranche of US economic data increased the likelihood of a recession. At the time of writing, the USD/CHF is trading at 0.9070.

Wall Street fluctuates between gains and losses. US Treasury bond yields continued to drop as the bond market rallied, on investors seeking safe-haven assets. The USD/CHF fell to a multi-month low, though it recovered some ground after US data revealed elevated recession fears.

The ISM Non-Manufacturing PMI headed to 51.2, less than the expected 54.4, and fell short of the previous month’s reading of 55.1. Business activity deterioration, and a decline in new orders growth, were the reasons for the dip. Earlier, the ADP Employment Change report showed that private hiring in February rose by 145K, below the anticipated 200K, trailing January’s upwardly revised figure of 261K.

Given the backdrop that labor market indicators suggesting a downturn in unemployment claims could pave the way for a weak US Nonfarm Payrolls report. The consensus estimates that the US economy in March created 240K jobs, lower than February’s 311K.

USD/CHF Technical Analysis

The daily chart shows that the USD/CHF remains downward biased. Wednesday’s fall toward a multi-month low at around 0.9005 and a late recovery is forming a hammer, which, preceded by a downtrend, can exacerbate an upward correction. For a bullish continuation, the USD/CHF needs to reclaim 0.9100. Above that resistance, a previous support trendline turned resistance around 0.9170-0.9180, which would be the next supply zone, ahead of testing the 20-day EMA. Otherwise, the USD/CHF could extend its losses below 0.9000.

What to watch?

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

GBP/USD trims gains, back to around 1.3500

GBP/USD now surrenders part of the earlier move to multi-week peaks around 1.3530 and comes close to the 1.3500 support on Monday. Cable’s uptick comes in tandem with decent gains in the Greenback, always amid persistent uncertainty lingering over the reopening of the Strait of Hormuz and US-Iran talks.

EUR/USD slips to daily lows near 1.1540

EUR/USD now loses further momentum and recedes toward the 1.1540 zone, or daily lows, on Monday. The pair’s bearish performance action comes as investors continue to assess Friday’s disappointing US jobs data in a context where renewed tensions in the Middle East lend decent support to the US Dollar.

Gold clings to daily gains; focus is back to $4,400

Gold picks up pace and advances past the $4,350 mark per troy ounce, adding to Friday’s gains. That said, the yellow metal keeps pushing harder despite the better tone in the US Dollar, and is closely following the Fed’s interest-rate outlook as well as developments in the Middle East

Crypto Today: Bitcoin, Ethereum, XRP eye short-term recovery amid ETF inflows

Cryptocurrency prices are gaining traction on Monday, with Bitcoin (BTC) trading above $65,000, Ethereum (ETH) holding the near-term $1,900 support and Ripple (XRP) hovering above the critical $1.00 demand zone. The broad recovery comes amid capital inflows through US-listed Exchange-Traded Funds (ETFs).

US Payrolls miss – RBA on deck tomorrow

It would be remiss of me not to kick off this morning’s report with a rundown of last Friday’s US jobs report, which was a belter. Headline payrolls fell by 23,000, versus expectations of an 80,000 gain. The BLS noted that May was revised down by 66,000 (from 129,000) and June by 37,000 (from 57,000), resulting in combined May-June revisions of 103,000 lower than previous reports.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.