Dollar recovers mildly against European currencies in early US session as data showed consumer spending rose for the fifth consecutive month by 0.3% in February. Income, though, was flat. Headline PCE moderated from 2.1% yoy to 1.8% yoy while core PCE dropped to 1.3% yoy. The data suggests that recovery in US economy is getting more sustainable and with improvements in job, spending would gain momentum ahead. Inflation though, remains subdued suggesting there is still no urgent need for Fed to remove policy accommodations.
Euro gapped higher as the week starts as investors are relived by the EU-IMF bailout plan for Greece. Nevertheless, the common currency lost momentum as the day goes and received no special support from economic data. Eurozone consumer confidence was unchanged at -17 in March, economic confidence rose to 97.7, industrial confidence rose to -10 while services confidence rose to 1.
Australia dollar is the best performer today, boosted by hawkish comments from RBA Governor Stevens. Stevens said that it's unwise to leave interest rates right down at rock bottom any longer than you need, and interest rates may need to continue to rise to contain inflation. There are increasing speculation that RBA will hike again by another 25bps on April 6.
AUD/JPY's rally extends further to as high as 84.75 today is still in progress to test 86.17 high. While upside momentum is seen diminishing with mild bearish divergence condition in daily MACD, there is no confirmation of reversal of medium term trend yet. The rally from 08 low of 55.11 might still continue and break above 86.17 will target 90 psychological level next.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0692; (P) 1.0722; (R1) 1.0771; More.
Intraday bias in USD/CHF remains neutral and pull back from 1.0750 could still extend further. Nevertheless, we'd expect downside to be contained well above 1.0546 support and bring rise resumption. Above 1.0750 will target 1.0890 resistance next. Break will affirm the case that rise medium term rise from 0.9916 is resuming for another high above 1.0897. However, note that decisive break of 1.0546 will dampen this bullish view and suggest that fall from 1.0897 is still in progress for another low below 1.0506.
In the bigger picture, medium term correction from 1.2296 should have completed with three waves down to 0.9916 already. Current rise from 0.9916 is tentatively treated as resumption of the long term up trend from 2008 low of 0.9634. Sustained break of mentioned medium term trend line resistance (now at 1.0818) will further affirm this view. In such case, we'd be looking at stronger rise to 1.1963/2296 resistance zone in medium term. On the downside, sustained break of rising trend line support (now at 1.0526) will suggest that rise from 0.9916 is completed. The three wave corrective structure will in turn argue that another low could be seen below 0.9916 before USD/CHF makes a bottom.