Markets are rather mixed in thin holiday trading today. Broad based strength is seen in Swissy and Loonie. EUR/CHF finished a rather brief consolidation and resumes recent fall to as low as 1.4879 so far. Canadian dollar also maintains recent strength and surges to new multi-month high against Aussie and Euro. October GDP report from Canada missed expectations slightly but the Loonie remains supported by extended recovery in crude oil as well as speculations that China and Russia may increase Canadian dollar in their reserve holdings. Dollar remains steady against Euro after personal income and spending came in slightly below expectations.
Personal spending in US grew 0.5% in Nov while income grew 0.4%. Both were below expectation of 0.5% and 0.3% respectively. Headline PCE rose 1.5% yoy versus consensus of 1.6%. Core PC was unchanged at 1.5% yoy. Canadian GDP rose 0.2% mom in October, below expectation of 0.3% mom. German Import price rose 0.4% mom, dropped -5% in November. New Zealand GDP released overnight rose 0.2% qoq in Q3, below expectation of 0.4% qoq.
The BOE's minutes for the meeting on December 9-10 unveiled that MPC members have voted unanimously (9-0) for maintaining the policy rate at 0.5% and the asset purchase program by 200B pounds. Policymakers acknowledged improvement in economic outlook and forecast that the country will return to grow in 4Q09. However, weaknesses including growth in money supply remain a drag. The committee will discuss about change in monetary policy in February, the month when the quarterly Inflation Report is published. 2 MPC members, Miles and Dale, voted against expanding the Asset Purchase Program by +25B pound to 200B pound in November. However, both of them opted for consensus and agreed to keep the program unchanged.
Looking at the dollar index, while upside moment continues to diminish with 4 hours MACD staying below signal line, further rise is still mildly in favor as long as 77.86 minor support holds. Current rally from 74.19 is still expected to extend to 38.2% retracement of 89.62 to 74.19 at 80.08. A break below 77.86 will suggest that a short term top is formed and bring some pull back, probably to 4 hours 55 EMA (now at 77.24) before rally resumption.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0452; (P) 1.0478; (R1) 1.0513; More
USD/CHF dips after failing to take out 1.5060 resistance. Consolidations from there is still in progress and deeper pull back to 4 hours 55 EMA (now at 1.0389) could be seen. But downside the current consolidations is expected to be contained well above 1.0175 resistance turned support and bring resumption of whole rise from 0.9916. Above 1.0506 will target medium term support turned resistance at 1.0590 next.
In the bigger picture, medium term fall from 1.1963 has completed with five waves down to 0.9916 already. Also, the three wave consolidation from 1.2296 should also be finished too. Current rise from 0.9916 is expected to extend further to medium term trend line resistance first (now at 1.1078). Sustained trading above the trend line will affirm the case that long term rise from 2008 low of 0.9634 is resuming for another high above 1.2296. On the downside however, a break of 0.9959 support will invalidate this bullish view and argue that medium term down trend in USD/CHF is still in progress for 0.9634 low.