- The Swiss Franc (CHF) benefited from the US-China tussle over the Hong Kong bill.
- Uncertainty surrounding Brexit, doubts over global growth adds to the risk-off mood.
- US data, Fedspeak and trade/political headlines will be the key to follow.
With the latest risk aversion supporting the Swiss Franc, USD/CHF pulls back to 0.9980 by the press time of early Wednesday.
Among many, the key reason for the present risk-off can be ascertained to the US-China tussle over the Hong Kong bill that was recently passed by the United States’ (US) House of Representatives. Even if the same is yet to cross the Senate in order to become a law that requires the US to check Hong Kong’s sovereignty on an annual basis, China has already warned its to-be trading partner to stay away from internal matters.
The bill is likely to add to the fears of another failed round of trade talks between the US and China, which in turn could weigh on the global economy. It should be noted that the International Monetary Fund (IMF) recently cut down global growth forecast to the lowest since the Great Financial Crisis (GFC) citing trade pessimism as the key reason.
Other than trade worries, doubts over the Brexit, expectations of further easing by China and a rate cut from the Bank of Korea, add weakness to the pair.
Traders will now keep a close tab on the trade/political headlines while also not missing on the US Retail Sales and Fedspeak for predicting near-term pair moves.
Technical Analysis
FXstreet Analyst Haresh Menghani holds near-term bullish bias considering a two-month-old rising channel. However, chances of immediate pullback can’t be denied:
"Given the pair's repeated bounce from a support marked by the lower end of a two-month-old ascending trend-channel, the near-term bias remains tilted in favour of bullish traders. Moreover, technical indicators on hourly charts have been losing positive momentum but maintained their bullish bias on the daily chart, supporting prospects for some dip-buying interest. Hence, any meaningful slide might still be seen as an opportunity to initiate some fresh bullish positions near the mentioned trend-channel support, currently near the 0.9935 region. Meanwhile, a sustained strength beyond the parity mark might prompt some technical buying and accelerate the momentum further towards the recent swing highs near the 1.0025-30 region."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays below 1.0700 ahead of US data
EUR/USD stays in a consolidation phase slightly below 1.0700 in the European session on Wednesday. Upbeat IFO sentiment data from Germany helps the Euro hold its ground as market focus shifts to US Durable Goods Orders data.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold manages to hold above $2,300
Gold struggles to stage a rebound following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% ahead of US data, not allowing XAU/USD to gain traction.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.