Dollar is still under much pressure as Gold surges to as high as 1167.8 today and remains firm. Yen also follows dollar lower as European equities are lifted by solid PMI figures. Further pressure is seen in both dollar and yen as US stocks open sharply higher. Commodity currencies reverse last week's losses and rebound on improvement in risk appetite while Sterling is also lifted by strength in UK stocks. Canadian dollar is additional boosted by stronger than expected retail sales report.
Eurozone PMIs showed faster recovery in the economy with PMI manufacturing risen from 50.7 to 51.0 and PMI services risen from 52.6 to 53.2. Data from France is particularly impressive with French services PMI rose to 60.4 but manufacturing PMI dropped to 54.2. Germany PMI manufacturing and services improved to 52.0 and 51.5 respectively. While Euro strengthens against dollar and yen today, it's lagging behind commodity currencies with EUR/AUD dipped below 1.62.
Headline retail sales in Canada rose more than expected by 1.0% in September (versus consensus of 0.6%), while ex-auto sales rose 1.1% versus expectation of 0.4%. Canadian dollar extends the rebound against dollar and rises versus Euro too.
Dollar's weakens this week is triggered by gold's strength as well as St Louis Fed James Bullard's comment that he supports extending Fed's purchases of mortgage-backed securities beyond Q1 of 2010. Dollar index's break of 75.21 minor support indicates that recovery from 74.68 has completed at 75.88 already. The corrective structure argues that dollar index is not bottomed yet. Intraday bias is mildly on the downside for the moment and deeper decline could be seen to 74.68 low below. Though, we'll look for some strong support at next key level of 74.31.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0125; (P) 1.0174; (R1) 1.0226; More
USD/CHF's fall from 1.0222 extends further to as low as 1.0071 in early US session and at this point, intraday bias remains mildly on the downside for 1.0032/34 support. As noted before, the corrective structure of the rise from 1.0034 to 1.0222 argues that USD/CHF's down trend is still in progress. Break of parity will target 100% projection of 1.0337 to 1.0034 from 1.0222 at 0.9919 next. On the upside, above 1.0131 will turn intraday bias neutral again.
In the bigger picture, current development suggests that USD/CHF's medium term fall from 1.1963 is still in progress. Sustained trading below parity will pave the way to retest 2008 low of 0.9634. On the upside, break of 1.0222 will argue that fall fro 1.0337 has completed. But there won't be indication of medium term reversal before a break of 1.0337 resistance.