Markets are generally quiet today except that Swissy Franc is lifted by comments from SNB board member Jean-Pierre Danthine and jumped to new record high against Euro. Danthine echoed recent SNB comments that deflationary trends have practically disappeared. Also, he said that Swiss exports had proven to be robust despite a strong Swiss franc. Though, Danthine also reiterated that SNB would step in again if deflationary risks reappear.
Bank of International Settlements urged governments and central banks to consider when and how the powerful stimulus measures cano be phased out. BIS warned that cumulating side effects themselves pose a danger that, at the very least, implies exiting sooner than may be comfortable for many. Also, BIS warned that keep rates too low for too long alters investment decisions and would distort private incentives to trade in markets and thus compromise liquidity and market depth.
Economic data provided little inspiration. US Personal income rose less than expected by 0.4% in May but spending grew slightly more than expected by 0.2%. Headline PCE and core PCE are both high than consensus at 1.9% yoy and 1.3% yoy respectively. Eurozone M3 money supply growth remained negative at -0.2% yoy in May. Japan retail sales rose much less than expected by 2.8% yoy in May.
Dollar index continues to stay in range of 85.09/86.42 today. Another fall is still in favor as correction from 88.7 continues and below 85.09 will target medium term trend line support at 83.18. Nevertheless, above 86.42 will argue that pull back from 88.70 is finished and will flip bias back to the upside for retesting this high.
EUR/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.3447; (P) 1.3523; (R1) 1.3590; More
EUR/CHF dives further to as low 1.3356 so far today and at this point, intraday bias remains on the downside for 1.3 psychological level next. On the upside, above 1.3505 minor resistance will turn intraday bias neutral and bring recovery. But after all, we'll stay bearish as long as 1.3733 support turned resistance holds and expect another fall sooner or later.
In the bigger picture, EUR/CHF's down trend from 2007 high of 1.6827 is still in healthy state as it's trading well below 55 weeks EMA. Next target will be 100% projection of 1.8234 to 1.4391 from 1.6827 at 1.2984, which is close to 1.3 psychological level. On the upside, break of 1.4039 resistance is needed to be the first signal of medium term reversal. Otherwise, outlook will remain bearish.
Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised 23:50 JPY Retail Trade Y/Y May 2.80% 4.80% 4.90% 08:00 EUR Eurozone M3 Y/Y May -0.20% 0.30% -0.10% 12:30 USD Personal Income May 0.40% 0.50% 0.40% 12:30 USD Personal Spending May 0.20% 0.10% 0.00% 12:30 USD PCE Deflator Y/Y May 1.90% 1.80% 2.00% 12:30 USD PCE Core M/M May 0.20% 0.10% 0.10% 12:30 USD PCE Core Y/Y May 1.30% 1.20% 1.20%