Yen remains weak in early US session while dollar continues to stay in tight range against most majors even though it recovers mildly. While yen crosses dominate the top movers chart, it's swissy's weakness in early US session that catches most attention. EUR/CHF soars through 1.5223 resistance and reaches as high as 1.5242 so far while USD/CHF rebounds strong to as high as 1.0741. EUR/CHF will likely extend rally towards 1.53 level and it would be interested to see how far it could take USD/CHF further.

Much stronger than expected retail sales report from UK gives the pound a big boost in European session. Sales rose sharply by 2.7% mom, 2.9% yoy in June versus expectation of 0.3% mom, 2.1% yoy. Nevertheless, the positive picture was somewhat darkened by downward revision in May's data to -0.3% mom, -2.0% yoy. Technically speaking, the picture of the pound remains generally weak. The rebound against dollar is far from convincing comparing to that of Euro and Aussie. EUR/GBP does pull back today it's still kept well above near term support of 0.8546. Looking at GBP/AUD, this week's break near term trend line support suggests that expanding triangle consolidation from 1.9684 should have completed at 2.0979. In other words, GBP/AUD might be resuming the long term down trend that started back in 2008. Hence, Aussie is still preferred against sterling in case of further risk appetite rally.

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Other economy data released today saw US initial jobless claims rose to 554k. Continuing claims fell by more than expected 88k to 6.2m, lowest since mid-April. Eurozone current account deficit narrowed more than expected to EUR -1.2B. Japan trade surplus widened less than expected to 0.44T yen.

USD/CHF Mid-Day Outlook

USD/CHF's rebound from 1.0622 extends further to as high as 1.0741 in early US session and is touching 4 hours 55 EMA. At this point, some more recovery might still be seen but after all, we'd expect upside to be limited below 1.0816 resistance and bring fall resumption. Consolidation from 1.0590 should have completed already and whole fall from 1.1963 is likely resuming. Current decline is treated as the last leg in the five wave sequence from 1.1963 and will target 1.0366 low next. Break of 1.0590 low will confirm this bearish view. However, above 1.0816 will mix up short term outlook and turn focus back to 1.0938 resistance.

In the bigger picture, there is no change in the broader view that price actions from 1.2296 are consolidation to whole medium term rise from 0.9634 only, with fall from 1.1963 as the third leg. Indeed, the possible five wave structure of such decline from 1.1963 argues that it's the last leg of consolidation and is near to completion. Hence, while another fall is likely and a marginal low below 1.0366 cannot be ruled out, downside should be contained by 61.8% projection of 1.1740 to 1.0590 from 1.1021 at 1.0310 to complete the fall from 1.1963 and the consolidation from 1.2296. On the upside, above 1.0938 resistance will in turn argue that fall from 1.1963 has completed and break of 1.1021 will solidify the bullish case and pave the way for strong rebound.

USD/CHF

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised
23:50JPYTrade Balance (JPY) Jun0.44T0.51T0.22T0.31T
08:00EUREurozone Current Account (EUR) May-1.2B-3.6B-5.9B 
08:30GBPRetail Sales M/M Jun1.20%0.30%-0.60%-0.90%
08:30GBPRetail Sales Y/Y Jun2.90%2.10%-1.60%-2.00%
12:30USDInitial Jobless Claims554K555K522K 
14:00USDExisting Home Sales Jun 4.80M4.77M 
14:30CADBoC Monetary Policy Report ---- 
14:30USDNatural Gas Storage 63B90B