- USD/CHF is grinding near an intraday high, reversing Friday’s reversal from the weekly high.
- CFTC data indicated bearish US dollar bets jumped to record highs.
- US statistics signal concerns about a change in Fed policy, even as it lifted the dollar from a 15-month low last week.
- The first reading of the US S&P Global PMI indices for July will guide the intraday movements, the Fed statements, US GDP in the 2nd quarter are key.
USD/CHF is holding on to modest gains around 0.8665 as markets prepare for top-level data/events during Monday morning in Europe. This means the Swiss Franc (CHF) pair rose for the first time in four weeks, rebounding from the lowest levels since late 2015. American dollar joyous upbeat data that challenged the Fed’s dovish bias. However, asset managers’ recent bearishness towards the US dollar and concerns over today’s preliminary US S&P Global PMI data for July cast doubt on recent buyers of the pair.
That said, Bloomberg cites data from the US Commodity Futures Trading Commission (CFTC) for the week ended July 18 to report that asset managers raised bets on the bearish dollar to a record 18% amid speculation that slowing US inflation will accelerate the end of 16 months of Federal Reserve policy tightening.
Of note, the US Dollar Index (DXY) is flirting with an intraday low near 101.00 as it pulls back from an eight-day high while displaying cautious market sentiment. With that, the greenback posted its first five-day loss against six major currencies after rebounding from its lowest levels since April 2022 last week.
US housing and regional manufacturing indexes were mostly negative last week, but an improvement in the Retail Sales Control Group for June kept both Fed hawks and US dollar buyers at bay. Along the same lines, upbeat prints of the University of Michigan’s consumer confidence index (UoM) and consumer inflation expectations for July were released earlier. Although the US consumer price index (CPI) and producer price index (PPI) for June joined the former below expectations Non-agricultural wages (NFP) in 15 months to tease the direction of Federal Reserve (Fed) policy in July and challenge US dollar bulls.
Therefore, USD/CHF traders will not only be paying attention to today’s US PMI, but will also be closely watching the first US Gross Domestic Product (GDP) data for the second quarter (Q2) of 2023 and Fed Chair Jerome Powell’s ability to defend the hawks for clear directions. At home, Wednesday’s Swiss ZEW Survey – Expectations and Friday’s KOF Leading Indicator for July may entertain Swiss franc traders.
Technical analysis
The first daily close for the 10-DMA in two weeks remains USD/CHF buyers are hopeful if it doesn’t drop back below the DMA resistance-turned support of 0.8642.