Swiss Franc is mildly lower today after consumer inflation report. CPI in June dropped -0.4% mom, rose 0.5% yoy versus consensus of -0.1% mom, 1.0% yoy. Recent strength in Swiss Franc was driven by SNB's message of disappearing deflation risk, which led to exit of intervention. However, SNB has also made it clear that they would resume interventions should deflation risks return. Today's data might be viewed as a threat to SNB. Meanwhile, EUR/CHF accelerated after breaking 1.4 level decisively and reached as low as 1.3072 before recovering, which was close to 1.3 psychological level. We might seen some support from 1.3 in near term.
Elsewhere Canadian building permits dropped sharply by -10.8% mom in May. Japan Leading indicator dropped slightly more than expected to 98.7 in May. Australia trade surplus came in widen than expected at AUD 1.65b. Focus will now be on ISM non-manufacturing index.
As expected, RBA left cash rate unchanged at 4.5% today. In the accompany statement, Governor Glenn Stevens said 'caution in financial markets has been evident in the past couple of months'. However, he remained confident that Australia's growth will be about trend. Concerning inflation, policymakers forecast the rate of CPI increase is likely to be a little above 3% in the near term, due to the effects of 'increases in tobacco taxes announced earlier in the year and significant increases in prices for utilities'. More in RBA Monetary Policy Likely To Pause Until 4Q10. Aussie To Fall Further As Growth Affected By China.
Dollar remains broadly soft on risk appetite as global equities rebound. European major indices are generally higher with FTSE up 2.4%, DAX up 2.4% while CAC 40 is up over 3%. As noted before, while some more consolidation might be seen in dollar index above 84.13. There is no indicate of bottoming as long as 86.42 resistance holds. Correction from 88.7 is still expected to continue and below 84.13 will target medium term trend line support (now at 83.58) or below. But strong support is expected at 38.2% retracement of 74.19 to 88.70 at 83.15 to bring up trend resumption finally.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0618; (P) 1.0645; (R1) 1.0672; More.
USD/CHF dips lower to 1.0562 not there's no follow through selling so far. Nevertheless, intraday bias remains on the downside with 1.0695 minor resistance and current decline would 1.0434 support next. On the upside, above 1.0695 will indicate that a temporary low is formed and bring recovery. But after all, risk remains on the downside as long as 1.1009 resistance holds and another fall remains in favor.
In the bigger picture, current development suggests that whole rise from 0.9916 is finished at 1.1729 already. Fall from there is possibly part of the medium term sideway pattern that started at 2007 low of 0.9634. Further fall could now be seen to outer trend line support (0.9634, 0.9916, now at 1.0009). On the upside, break of 1.1009 resistance will revive the case that fall from 1.1729 is merely a correction and rise from 0.9916 is still set to resume for 1.2296 resistance next.