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MARKET DEVELOPMENT –Swiss Franc Rises Despite SNB Intervention, US Yield Curve Nears Inversion

DailyFX 2019 FX Trading Forecasts

GBP: UK jobs report was broadly positive with wage data hovering around decade highs, while the employment change printed better than analyst forecasts. While the unemployment rate ticked up marginally, the figure is still relatively robust. However, the data had limited impact on the Pound, given that Brexit uncertainty continues to dictate price action, alongside the monetary policy outlook. As such, gains in the Pound remain shallow at best.

CHF: The Swiss Franc outperforms across the G10 complex with risk off flows continue to support. USDCHF now trading at the lowest level since September 2018, having broken the double at 0.9690-95. Latest sight deposits continue to show that the SNB have intervened in FX markets to stem the appreciation in the Swiss Franc which trades at a 2yr high against the Euro. However, with risk off flows underpinning the CHF and expectations of ECB stimulus keeping the Euro on the backfoot. Risks remain tilted for further CHF gains, particularly against the Euro.

EUR: ZEW survey readings provided yet another reminder that the Eurozone is in need of ECB stimulus. The German economic sentiment had plunged to the lowest level since December 2011 with ZEW citing the recent escalation and rising no-deal Brexit risks as key factors behind the weak reading. However, the Euro had largely been unchanged following the release, given that the weak survey is not all to surprising in light of the growing concerns surrounding the global economy. Elsewhere, the Euro later pulled back from best levels following the higher than expected US CPI report, in which the yearly rate rose 1.8%, above expectations of 1.7%. Although, this is unlikely to alter Fed policy going forward with focus on the trade war tensions placing a greater weight to the central banks thinking. Expectations are for the Fed to ease again at the September meeting. Eyes will also be on the US 2s10s yield curve which continues to edge closer towards inversion at 3.5bps last.

Swiss Franc Rises Despite SNB Intervention, US Yield Curve Nears Inversion - US Market Open

Source: DailyFX, Thomson Reuters

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Swiss Franc Rises Despite SNB Intervention, US Yield Curve Nears Inversion - US Market Open

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WHAT’S DRIVING MARKETS TODAY

  1. DAX 30 & CAC 40 Technical Outlook Remains Weak” by Paul Robinson, Currency Strategist
  2. EURUSD Price Under Pressure After EU/German Sentiment Crashes” by Nick Cawley, Market Analyst
  3. Gold Prices Surge to 6 year High, Silver Prices Eye Resistance Following Breakout” by Justin McQueen, Market Analyst
  4. Using FX To Effectively Trade Global Market Themes at IG” by Tyler Yell, CMT , Forex Trading Instructor

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX