.jpg)
Can the U.S. initial jobless claims report spur big intraday moves for USD pairs today?
Check out this potential breakout I’m watching on USD/CHF.
Before moving on, ICYMI, yesterday’s watchlist checked out USD/CAD’s triangle pattern ahead of the BOC decision. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. ADP non-farm employment change at 140K vs. 149K expected, 111K previous
Canadian Ivey PMI dipped from 56.5 to 53.9 in February as employment took a huge hit while prices also dipped
BOC kept interest rates on hold at 5.00% as expected, retaining its January wording and emphasizing that “upside risks to inflation remain”
Fed head Powell mentioned that progress on bringing down inflation is “not assured”
U.S. JOLTS job openings slowed from downgraded 8.89 million (initial 9.03 million) to 8.86 million in January to signal fewer hiring opportunities
BOC Governor Macklem ruled out expectations of easing during the BOC presser by citing “we could not rule out the need to raise rates further if there were new inflation surprises”
U.S. EIA crude oil inventories rose by 1.4 million barrels vs. expected increase of 2.4 million barrels and earlier gain of 4.2 million barrels, suggesting stronger demand conditions
New Zealand manufacturing sales fell by 0.7% q/q in Q4 2023 vs. earlier 2.8% q/q decline
Japanese average cash earnings accelerated from 0.8% y/y to 2.0% in January vs. 1.3% forecast, suggesting strengthening wage inflation
Chinese trade surplus grew from 75.3 billion USD to 125.2 billion USD vs. 110.3 billion USD forecast, as exports jumped 7.1% y/y while imports climbed 3.5% y/y
Price Action News
Overlay of AUD vs. Major Currencies Chart by TradingView
The Loonie staged a big rally after the BOC surprisingly stuck to its hawkish tone by mostly repeating its January statement and reiterating that underlying inflation remains elevated.
However, it was the Aussie that chalked up the biggest and most sustained moves in the past trading sessions, presumably benefitting from a slight pickup in risk-on vibes midweek.
In today’s Asian market hours, China printed a stronger than expected trade balance that revealed a significant 7.1% year-over-year increase in exports. This allowed the Aussie to extend its rallies, particularly against lower-yielders like the dollar and Swiss franc.
Upcoming Potential Catalysts on the Economic Calendar:
SNB foreign currency reserves at 8:00 pm GMT
U.S. Challenger job cuts at 12:30 pm GMT
ECB monetary policy statement at 1:15 pm GMT
U.S. initial jobless claims at 1:30 pm GMT
ECB press conference at 1:45 pm GMT
Fed head Powell’s testimony at 3:00 pm GMT
FOMC member Mester’s speech at 4:30 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
USD/CHF 15-min Forex Chart by TradingView
This dollar pair has formed lower highs and found support around the .8815 mark so far this month, creating a descending triangle formation.
Weaker than expected U.S. leading jobs indicators like the ISM services PMI jobs data and ADP non-farm employment change figure have dragged USD/CHF down to the triangle support.
Will it keep holding this time?
The U.S. initial jobless claims figure might be a coin toss, as a strong read could spur a bounce back to the triangle top near R1 (.8850) while a downside surprise could trigger a breakdown below S1 (.8800) onto S2 (.8770) or lower.
After all, dollar traders are getting jittery ahead of Friday’s NFP release, so further misses in jobs data might encourage bears to come out early.
Meanwhile, the Swiss franc also has the SNB foreign currency reserves data to deal with, as a large jump could be indicative of sneaky central bank intervention. If so, USD/CHF might spike above the triangle top and rally to the upside targets at R2 (.8880) and beyond.
In any case, make sure you account for the average USD/CHF volatility when trading this one!
