Dollar spikes to new 2009 low earlier today on the back on persistent strength in gold and crude oil. Gold made another record high at 1069.7 earlier today, just shy of 1070 level. Crude oil also strengthened to 74.47 level and is still set to take on 75 resistance. Dollar index dipped to new 2009 low of 75.74. Nevertheless, some profit taking is seen in dollar shorts after dollar hits key support levels against Euro and Canadian dollar. There is no decisive selling in the greenback even though it's vulnerable to another sharp fall.
On the other hand, sterling remains weak in general after consumer inflation report released earlier today. Headline CPI slowed much more than expected from 1.6% yoy to 1.1%, a seven year low. Core CPI also dropped slightly from 1.8% yoy to 1.7%. The data further raised speculations that BoE would keep rates at historical low of 0.50% and would expand the quantitative easing campaign. UK BRC retail sales rose 2.8% in September and RICS house price balance improved to 22%.
Data from Eurozone was not impressive neither. German ZEW economic sentiment unexpectedly dropped from 57.7 to 56 in October while Eurozone ZEW also dropped to 56.9. Swiss combined PPI rose more than expected by 0.2% mom in September. New Zealand retail sales rose more than expected by 1.1% mom in August. Australian NAB business confidence dropped form 18 to 14 in September. Canadian new housing price index rose 0.1% mom in August.
Looking at the dollar index, firstly intraday bias remains on the downside with 76.29 minor resistance intact. Nevertheless, note that there is no decisive selling to send the index through 75 level yet even though it dipped marginally lower to 75.74. A break of 76.29 minor resistance will flip intraday bias back to the upside for 77.47 resistance and break there will affirm the view to that weakness in dollar is ending. However, note again that sustained trading below 75 level will invalidate out view and pave the way to 71.31/74.31 support zone.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0217; (P) 1.0284; (R1) 1.0337; More
USD/CHF's break of 1.0230 minor support suggests that fall from 1.0452 has resumed. Intraday bias remains on the downside for the moment. Break of 1.0185 support will confirm resumption of medium term down trend from 1.3063 and should then target 100% projection of 1.2296 to 1.0366 from 1.0883 at 1.0033, which is close to parity. On the upside, above 1.0277 minor resistance will turn intraday outlook neutral first. Break of 1.0358 resistance will flip bias back to the upside for 1.0452 resistance.
In the bigger picture, whole set of price actions from 1.2296 are treated as correction to the medium term rally from 2008 low of 0.9634. Fall from 1.1963 is the third wave of such correction in form of five wave sequence (1.1158, 1.1740, 1.0590, 1.0883, 1.0185?). With 1.0530 resistance intact, there is no confirmation of bottoming yet. Nevertheless, even in case of another fall, USD/CHF should continue to lose downside downside momentum as it approaches key cluster support level of 1.001, 100% projection of 1.2296 to 1.0366 from 1.0883 at 1.0033, which is close to parity and finally bring reversal. On the upside, break of 1.0530 resistance will be an important signal that USD/CHF has already bottomed after missing 61.8% projection of 1.1740 to 1.0590 from 1.0883 at 1.0172 and will turn focus to 1.1021 resistance for confirmation.