Swiss Franc Benefits From Safe-Haven Flows, New Zealand Dollar Falters

The Swiss franc rallied against all of its major counterparts and is the best performing currency against the greenback on Tuesday, and the low-yielding currency may continue to appreciate throughout the day as it benefits from the rise in safe-haven flows. The USD/CHF is 90+pips from the open after moving83% of its daily ATR, and the bearish crossover of the 50-Day SMA (1.0515) through the 200-Day SMA at 1.0669 suggests that the pair will continue to retrace the advance from earlier this year, which could lead price action to test parity for the first time since December. However, the pair looks due for a corrective retracement as the daily RSI approaches oversold territory, and the dollar- franc may pare the overnight decline over the next 24 hours of trading as the 30-minute relative strength index bounces back from a low of 18.

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The New Zealand dollar extended the decline from earlier this week following the shift in market sentiment, and the rise in risk aversion could drive the exchange rate lower throughout the day, which could lead the exchange rate to test the August low at 0.6947. The NZD/USD is nearly 90points lower on the day after moving 109% of its average true range, but the bullish divergence in the 30-minute RSI could lead the kiwi-dollar to pare the overnight decline as it bounces back from oversold territory. As a result, the pair may push higher over the next 24 hours of trading, which could lead price action to cover the gap from the 240-SMA at 0.7043, but the rise in risk aversion could push the pair lower as market sentiment continues to drive the currency market. Key Levels/Indicators

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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com