Canadian dollar jumps to three year high against dollar as focuses are turning back to economic fundamentals. Markets are back in risk on mode on optimism for global growth after some positive economic data from US recently, and as Fed upgraded its growth forecasts.

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Canadian dollar remains preferred to the greenback on expectation of stronger demand for crude oil, even though oil price remains soft below 86 level. In additional, markets are buying loonie on expectation that BoC would have another three rate hikes in the next 12 months as strong exports boost the economy. Some more downside would likely be seen in USD/CAD in near term. However, we'd like to point out that momentum has been diminishing since last August and the USD/CAD could face some strong support around 0.98 level to bring yet another rebound.

On the other hand, the Swiss franc is also firm today and extends it's rebound across the board on worry that events in North Africa and Middle East might escalate. USD/CHF broke through 0.9523 support in early US trading, which suggests that the fall is now extending towards 0.93 level. EUR/CHF also extends it's decline through 1.3 level. Data from Swiss saw ZEW expectation improved slightly to -17.2 in February.

width=272Data released fro US saw CPI rose slightly to 1.% yoy in January with core CPI up more than expected to 1.0% yoy. Looking at the details, energy costs jumped 2.1% mom in January and was up sharply by 7.3% yoy. Food prices rose 0.5% mom, the largest rise since 2008, and was up 1.8% yoy. Core inflation was mainly boosted by 1% rise in clothing, the highest since 2009 and 2.2% rise in airline fares. Also released from US, initial jobless claims rose back to 410k in the week ended February 12, slightly above expectation of 403k. Continuing claims rose by 1k in week ended February 5 to 3.91m.

Recent development in the EUR/CAD is still inline with the view that rebound from 1.2775 is finished at 1.3776. We'd stay cautiously bearish in the cross and expect deeper fall ahead to 1.2775 support and below to extend the whole decline from 1.4342. However, a break above 1.3654 resistance will in turn indicate that rise from 1.2775 is in progress for a test on 1.4342 instead and will turn short term outlook bullish.

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USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9517; (P) 0.9628; (R1) 0.9702; More.

USD/CHF's fall from 0.9774 accelerates to as low as 0.9511 so far today. The break of 0.9523 support argues that rebound from 0.9329 is completed already. Also, with 0.9782 resistance intact, USD/CHF's price actions from 0.9300 might be a consolidation in the larger down trend only and has completed. Intraday bias is now on the downside for deeper fall to retest 0.9300/9329 support zone first. On the upside, above 0.9601 minor resistance will turn bias neutral first. But we won't turn bullish before sustained break of 0.9782 resistance.

In the bigger picture, USD/CHF failed to sustain above 55 days EMA again and recent development suggests that price actions from 0.9300 are merely consolidations in the larger down trend. That is, 0.9300 is not yet the bottom. Outlook will now be cautiously bearish as long as 0.9784 resistance holds. Decisive break of 0.9300 will confirm down trend resumption and target 61.8% projection of 1.8305 to 1.1288 from 1.3283 at 0.8946, which is close to 0.9 psychological level.

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Economic Indicators Update

GMTCcyEventsActualConsensusPreviousRevised
21:30NZDBusiness NZ Manufacturing Index Jan53.7--53.153.2
21:45NZDPPI Inputs Q/Q Q40.90%0.40%0.70% 
21:45NZDPPI Outputs Q/Q Q40.20%0.70%1.20% 
09:00EUREurozone Current Account (EUR) Dec-13.3B-6.1B-11.2B-10.5B
10:00CHFZEW Survey (Expectations) Feb-17.2---18.4 
11:00GBPCBI Trends Total Orders Feb-8-9-16 
13:30USDInitial Jobless Claims410K403K383K 
13:30USDCPI M/M Jan0.40%0.30%0.50% 
13:30USDCPI Y/Y Jan1.60%1.60%1.50% 
13:30USDCPI Core M/M Jan0.20%0.10%0.10% 
13:30USDCPI Core Y/Y Jan1.00%0.90%0.80% 
13:30CADWholesale Sales M/M Dec0.80%1.30%1.20% 
15:00EUREurozone Consumer Confidence Feb -11-11.2 
15:00USDLeading Indicators Jan 0.30%1.00% 
15:00USDPhilly Fed Survey Feb 2119.3 
15:30USDNatural Gas Storage -233B-209B

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