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USDCHF BEARISH after bullish odds decrease after 4-month lows

USDCHF BEARISH after bullish odds decrease after 4-month lows

Trend strong bearish after FOMC MEETING

USDCHF extended its three-week bearish wave, dipping as low as 0.8683 on Thursday before closing the day with mild gains above the 0.8700 round level.

The boune finished on dec13th 2023
New sell signal confirmed.
I am bearish strongly on this pair now, and will update if, based on my trading systems, trend reversals, position reducing, take profits, or trend change happens

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Fed Pivot Toward Interest Rate Cuts in 2024 and Gold’s Bullish Response

The Federal Reserve concluded its last FOMC meeting of the year, and as expected, they kept their benchmark interest rate unchanged.
Seventeen voting members are all predicting interest rate cuts next year, with five officials projecting a decrease of ¾%, five officials anticipating a larger rate cut than ¾%, and the remaining two voting members anticipating no rate cuts next year. According to their economic projections, the Fed believes core inflation will peak at 2.4% next year, which is lower than its projections in September of 2.6%.
The Federal Reserve is also projecting inflation will cool to 2.2% in 2025 and 2.0% in 2026. Their projections anticipate unemployment rising to 4.1% in 2024 and remaining at that level through 2026. The Fed also anticipates an economic deceleration forecasting growth at 1.4% next year, and rising to 1.8% in 2025 and 1.9% in 2026

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Swiss National Bank holds rates steady for second meeting The Swiss National Bank voted to hold interest rates flat at the Decemebr 14 meeting at 1.75% for the second meeting, the highest since 2008, an expected decision. Treasury yields hit lowest since August, fueling market optimism

U.S. stock futures climb as Fed hints at 2024 rate cuts; Dow hits all-time high.
Fed Open Market Committee keeps rates steady; markets react positively to dovish outlook.
Post-Fed, Treasury yields drop to lowest since August, signaling economic optimism.

U.S. stock futures experienced a significant uplift Wednesday night, following the Federal Reserve’s indication of possible rate cuts in 2024.

US DOLLAR DOWN YIELDS DOWN ASSETS vs Dollar UP

Federal Reserve’s Rate Cut Signal
The Federal Open Market Committee maintained interest rates between 5.25% and 5.5%, aligning with market expectations. However, the revelation of potential rate cuts in 2024 spurred a positive shift in market sentiment. The Fed’s decision, signifying the potential end of a cycle that included 11 rate hikes, has been viewed as a pivot towards a softer monetary policy approach

Impact on Treasury Yields
The Fed’s announcement influenced Treasury yields, with the 10-year note hitting its lowest since August. The dovish outlook implies further cuts through 2025 and 2026, potentially lowering the fed funds rate to 2%-2.25%. This forecast aligns with a brighter inflation outlook, as indicated by recent consumer and wholesale price data

Solar Stocks Respond Positively
The Invesco Solar ETF (TAN) saw a significant increase, with constituent stocks like Enphase Energy, SolarEdge Technologies, and Sunrun recording notable gains. This uptrend reflects the solar industry’s sensitivity to interest rates, as lower rates could reduce financing costs and improve valuations.

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The Swiss franc has jumped to its highest level against the dollar since 2015, when Switzerland’s central bank abandoned its policy to contain currency strength

The currency reached CHF0.8551 per dollar on Friday, its strongest level in almost nine years. Versus the euro, the franc rose as high as CHF0.94112.

+ What lies ahead for the Swiss economy?

The franc is outperforming all its G10 currency peers this year, bolstered by the view that the Swiss National Bank’s (SNB) preference for a stronger domestic currency will keep it afloat.

Last week, the central bank said that it was still willing to continue intervening in currency markets, but added that foreign currency operations could go in both directions following a focus on selling since mid-2022 to minimise inflationary risks.

Swiss inflation has stayed within the central bank’s target range of between 0 and 2% since June, backing its decision to keep rates unchanged since its last hike at its quarterly meeting in June.

As the economy slows, markets are pricing for the SNB to begin cutting rates in March.

A tourism sector that dreams of being a safe haven, pharma giants on a diet and industrialists in the grip of an economic slowdown: SWI swissinfo.ch journalists select the major developments that await the Swiss economy in 2024.

Growth continues to slow

The sluggish economy in the eurozone and interest rate rises in many countries will continue to have an impact on the Swiss economy next year. The State Secretariat for Economic Affairs (SECO) is forecasting GDP growth of 1.1%, down from 1.3% in 2023, the second year in a row that growth will be well below average.

As a result of the more restrictive monetary policy pursued by the Swiss National Bank (SNB), inflation should continue to fall next year, dropping below the 2% mark.

Despite the stagnation of the economy and the expected slight rise in unemployment (from 2% in 2023 to 2.3%), the shortage of qualified personnel is set to persist in Switzerland, as in other advanced economies. The staff shortage index has risen by a further 24% in 2023, according to data published at the end of November by the placement company Adecco and the University of Zurich’s Swiss Labour Market Monitor.

More than 120,000 vacancies existed at the end of August, when the latest figures from the Federal Statistical Office (FSO) were published. The sectors in which jobs are hardest to fill are healthcare, IT and engineering. As for the salary increases planned by companies (2% on average), these are likely to be largely absorbed by inflation once again.
Switzerland’s island of safety attracts tourists from all over the world

Swiss tourism was back in full swing in 2023, with overnight stays expected to top the 40 million mark for the first time. The coming months also look promising: the Swiss Economic Institute (KOF) at federal technology institute ETH Zurich is forecasting an increase of 270,000 overnight stays throughout Switzerland this winter.

With the strength of the Swiss franc, inflation and reduced purchasing power, the overall situation for the sector is rather poor. But according to Simon Wiget, director of Verbier Tourism, Switzerland stands out from the crowd because it offers a haven of peace in the midst of a world in turmoil. “In today’s anxiety-filled environment, people want to be reassured. And Switzerland offers a lot of security,” he told Swiss public television, RTS.

But compared with 2019 Switzerland is still missing some foreign guests, particularly those from faraway countries such as China, India, Japan and the Gulf monarchies. The situation concerning tourists from China is not expected to return to normal before the end of next year, according to Véronique Kanel, spokeswoman for Switzerland Tourism.

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Swiss pharma plays catch up as obesity drugs steal the show

Following a year of restructuring, big acquisitions and leadership changes, Swiss pharma will look to create some positive buzz and assure investors of their growth potential in 2024. Shortly after spinning off its generics division Sandoz in October, Novartis dialled up its five-year sales forecast as it focuses on so-called innovative therapies – on-patent treatments that have the highest profit potential.

The dust is also settling for Roche as the surge of Covid-19 test sales disappears from the balance sheet. CEO Thomas Schinecker, who will celebrate one year in the post in March, made a couple of big acquisitions in 2023 that could help make up for recent clinical trial disappointments and replace blockbusters nearing patent expiration.

With these investments, Swiss pharma will try to steal some limelight from peers such as Denmark’s Novo Nordisk, which dominated headlines in 2023 with anti-obesity drugs. Roche hopes its recent $2.7 billion (CHF2.3 billion) acquisition of a US biotech with obesity drugs in the pipeline will help it capture someExternal link of what analysts predict could be a $100 billion market in ten years.

The industry won’t be able to escape pressure to lower prices next year though. Even in wealthy Switzerland, a major increase in mandatory health insurance premiums has triggered questions about how much drug prices are to blame.

The greatest pressure is coming from the United States, where the government is moving forwards with negotiations on drug prices under the US Inflation Reduction Act. In December, the US government took another swipe at the industry, announcing plans to seize patents developed with government funding if drug prices are too high. This will all play into Swiss pharma’s investment and marketing decisions next year.

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Multinationals navigate geopolitical forces and domestic pressure

Switzerland’s largest global companies will continue to navigate the tug-of-war between China and the United States, and wider de-globalisation forces in 2024. Many companies see China as key to their growth strategy despite the country’s recent economic woes, human rights worries, and competing trade tariffs between the US and China.

Swiss companies will also face more domestic pressure, as the Responsible Business Initiative, which narrowly failed in a nationwide voteExternal link in 2020, makes a comeback. Campaigners have announced plans for a new version of the initiative next year aimed at holding companies accountable for their human rights and environmental impacts in global supply chains. They argue Switzerland needs to stay apace with regulation in the European Union, which is finalising a corporate accountability law.

One question hanging over multinationals is how the global deal for a minimum corporate tax rate will get rolled out and affect business location decisions. Switzerland will start to implementExternal link the 15% corporate tax rate as of January 2024 but many countries including the US, China, Brazil and India have no plans to implement the minimum corporate tax rate.

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Bleak outlook for the machinery industry

After two years of strong growth, the Swiss machinery, electrical equipment and metals industry (MEM industries) is going through a difficult period. The industry’s umbrella association, Swissmem, does not hesitate to speak of a recession.

In the first nine months of 2023, new orders fell by 9.9% compared with the same period last year. The rise in interest rates decided by central banks in recent months is weighing on the sales of an industry that employs more than 325,000 people in Switzerland and exports almost 80% of its production (60% of which to the EU).

Given the economic difficulties being experienced by Switzerland’s main partners, led by Germany, China and the United States, the outlook for the coming months is no more encouraging. “Most companies in the sector can expect a difficult period ahead,” said Stefan Brupbacher, director of Swissmem, at the end of November.

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Towards the end of the euphoria for Swiss watchmakers

Buoyed by a luxury sector that is not experiencing the crisis, Swiss watch exports are heading for a new record in 2023: in the first 11 months of the year, they exceeded the CHF24 billion ($27.7 billion) mark, up 7.7% on 2022. The Swiss watch industry now employs more than 65,000 people, a level not seen since the 1970s.

However, this period of exceptional growth, which has continued since the post-Covid recovery of 2021, is set to come to an end soon. “In the short term, caution is called for because of the geopolitical context, inflation and the strength of the Swiss franc, particularly among subcontractors who are facing postponed orders,” says Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry.

The Vontobel bank also expects a “normalisation of growth” for 2024, with an increase in the value of exports of between 2% and 4%. “Strong brands that have invested in marketing and their distribution network will continue to grow. For other brands, the situation is much more fragile: volumes will have to be revised downwards,” reckons Jean-Philippe Bertschy, a watch expert at Vontobel.

In the longer term, however, Pasche still sees opportunities for growth in established markets such as the United States and China, as well as in emerging markets such as India, Brazil and Indonesia.

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E/$ frozen, good session for Swiss Franc and Yen

The euro/dollar parity was stuck at around 1.1060 on Friday, but that doesn't mean that all currency pairs ended the day freewheeling, wisely replicating their levels of the previous day.

The Swiss franc stood out, gaining 0.5% against both the dollar and the euro, while the British pound climbed +0.2%.
The most interesting development concerned the yen, which continued its upward trajectory, while the dollar broke through the 141 level to record its best performance since the morning of July 31.

The Dollar Index fell by 0.1% to 101.1, the level at which it closed on July 16.
Tuesday's break of important supports was confirmed by 3 sessions below these key levels.
As for the E/$ pair, the test of 1.1250 will have to be watched very closely in early 2024, but it's beyond 1.1600 that the greenback's long-term trend could turn negative and cause the FED some worries

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Swiss National Bank sold $45 billion of forex in Q3

The Swiss National Bank (SNB) sold foreign currency worth 37.63 billion Swiss francs' ($44.73 billion) in the third quarter, the central bank said on Friday, as its recent efforts to boost the Swiss franc to curb imported inflation neared the end.

The second largest amount of forex sales since the SNB started publishing its data on its transactions in 2020, it is likely to be the last big sell-off for some time, after Swiss inflation returned to the SNB's 0-2% target range, falling to 1.4% in November.

Chairman Thomas Jordan told reporters in December at the SNB's most recent monetary policy assessment the bank was no longer focusing on foreign currency sales.

The sale in the three months to the end of September was a decrease from the record 40.3 billion francs' worth of dollars, euros and other currencies the bank sold in the second quarter.

The Swiss franc has continued to rise in value against the dollar and the euro, hitting 0.93525 versus the common currency earlier this week - its highest valuation since January 2015 in anticipation of interest rate cuts by the European Central Bank.

The SNB had focused on buying foreign currency - to slow the rapid strengthening of the safe-haven franc - until switching to forex sales in the second quarter of 2022.

Assuming inflation does not accelerate more than what is already anticipated for Q1 2024, I think we will not see much FX interventions in the Q1 2024 data

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s slightly lower in Wednesday trade. In the North American session, USD/CHF is trading at 0.8509, down 0.31%.

The Swiss franc continues to power higher and has climbed 2.5% against the slumping US dollar in the month of December. The Swissie has pummelled the greenback in 2023, gaining 7.7%, and is trading at its highest level since January 2015.

The Swiss National Bank has been buying Swiss francs during the year in order to boost its value and dampen inflation. This strategy has been successful but has come at a price, as the strong Swiss franc has made Swiss exports less competitive in global markets. The inflation rate is within the SNB’s target range of 0%-2% and the SNB’s inflation forecasts are also within the target range. This means that the central bank will likely decrease its currency intervention next year so long as there are no significant risks of inflation rising above 2%.

SNB unlikely to cut rates

The SNB has held the cash rate at 1.75% for two straight months and may have ended its rate-tightening cycle. The SNB has inflation right where it wants and there is little reason for the central bank to cut rates at this stage. The cash rate is not in restrictive territory as it is close to the expected level of inflation, which means that previous rate hikes are not hurting the economy, unlike the case in the US or the UK.
It’s a light data calendar between Christmas and New Year’s in the US. We’ll get a look at the Richmond Manufacturing Index today, with a market consensus of -6, compared to the -5 reading in November. On Thursday, unemployment claims are expected to drop to 205,000, down from 210,000 a week earlier.
USD/CHF Technical

USD/CHF is testing support at 0.8518. Below, there is support at 0.8479
0.8550 and 0.8559 are the next resistance lines

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Trend down old more usd
Dollar tentative as investors await Fed Dollar tentative as investors await Fed minutes
Gold firms on Fed rate-cut hopes; US data in focus

Gold prices rose on Tuesday, supported by the prospect of interest rate cuts in 2024 from the Federal Reserve, while investors look forward to a slew of economic data this week for more clarity on the U.S. rate outlook.
Markets are now pricing in an 86% chance of rate cuts from the Fed in March, according to CME FedWatch tool. Lower interest rates decrease the opportunity cost of holding non-yielding gold.

Also on the radar, data on U.S. job openings and December non-farm payrolls will also been keenly watched for more clarity on Fed rate path.

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I hedged my shorts now long. The upper short positions still active, but hedged today Asia session at 0.84971

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Hedge solved immediately, open below Gap
All shorts active again

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Hedge long again0,8472

Stop at 3N

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Bad Data for Dollar PMI OUR
The market waiting for Friday non farm
correcting continuation

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Daily Global Market Update
The Euro-Dollar pair experienced a slight decline in the last session, dropping by 0.2%. The Stochastic RSI indicates that we are currently in an oversold market condition.
Dollar-Yen Pair's Gains
The Dollar-Yen pair saw an increase of 0.7% in the last session. The RSI is currently giving a positive signal, suggesting potential continued upward movement.
Gold's Decline
Gold fell by 0.8% against the dollar in the last trading session. The CCI is currently giving a negative signal, hinting at a potential continued downtrend.

Global Financial Headlines
The US dollar has risen, bolstered by high US Treasury yields and a cautious market sentiment affecting Wall Street. Traders are now awaiting further economic data. Job openings in the US saw a decrease to their lowest level since March 2021, indicating a cooling job market. European markets have also experienced a sharp decline, with various sectors showing mixed performances.

Upcoming Economic Highlights
Key economic events to watch out for include the US ADP Employment Change, Initial Jobless Claims, Germany's Harmonized Index of Consumer Prices, and Japan's Jibun Bank Manufacturing PMI, among others. These data points are crucial for investors and traders to watch as they provide insights into the economic health of these countries.

US ADP Employment Change - 1315 GMT
US Initial Jobless Claims - 1330 GMT
Germany's Harmonized Index of Consumer Prices - 1300 hours GMT
Spain's 30y Bond Auction - 0940 GMT
Japan's Jibun Bank Manufacturing PMI - 0030 GMT
Japan's Monetary Base - 2350 GMT

DaveBrascoFX

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DaveBrascoFX

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