The US dollar has shown broad declines on Thursday, and the Swiss franc has jumped on the bandwagon. The Swiss currency has broken below the 91 level today and USD/CHF is at its lowest level since mid-June. If the dollar’s downswing continues, the round number of 90, which has psychological importance, could find itself under pressure.
Swiss data was a disappointment earlier the week, as the June ZEW Survey Expectations fell to 42.8, a sharp drop from 51.3 beforehand. Back in April, the index was at 72.2, and the sharp slowdown in business conditions is cause for concern.
On Friday, we’ll get another look at the health of the economy, with the release of the July KoF Economic Barometer (7:00 GMT). This index is also in a downturn, as the June reading slipped to 133.4, down from 133.2 points. The slowdown is expected to continue, with a consensus of 129.6 points in the upcoming release. Still, key US data is more of a market-mover than Swiss numbers, and a softer than expected US GDP report earlier today has sent the US dollar lower.
Powell non-committal to a September taper
The FOMC policy meeting was keenly anticipated, but in the end the Fed veered away from any tapering announcement. Fed Chair Jerome Powell stated that the economy would need to recover millions of jobs and inflation would need to be persistent for the Fed would consider a taper in September. This gives the Fed two months of inflation and employment data to determine if they can start scaling back asset purchases. The takeaway from the FOMC meeting is that the Fed remains dovish and the very earliest we would see a taper is the September meeting.
- USD/CHF faces resistance at 0.9157. Above, there is resistance at 0.9195
- On the downside, the pair is testing support at 0.9079. This is followed by 0.8810, a monthly support line
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-event
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