USDCHF declines by 0.41% amid mixed economic indicators for US and Switzerland

USDCHF Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	-0.41%	-35.2 Pips
Week to-date	-0.52%	-44.4 Pips
September	-0.06%	-5.1 Pips

Upcoming key events (London Time)

Fri 01:30 PM USD PCE Price Index, excluding food and energy (12-mth)

What happened lately

The United States experienced a notable increase in its GDP, growing at an annual rate of 3.0% in Q2 2024, according to the 3rd estimate released by the U.S. Bureau of Economic Analysis. Additionally, U.S. Pending Home Sales for August rose by 0.6% compared to a significant drop of -5.5% in July. The Census Bureau reported that durable goods orders excluding transportation increased by 0.5% in August, an improvement from the revised -0.2% in July. However, new orders for durable goods stagnated at 0% in August, a drastic fall from the revised 9.9% in July. The Department of Labor revealed a modest decrease in initial unemployment insurance claims to 218,000 for the week ending 21 September, compared to the prior figure of 219,000. On the downside, durable goods orders excluding defense dropped by -0.2% in August, although nondefense capital goods orders excluding aircraft managed a slight increase of 0.2% from a revised -0.1% in July. Meanwhile, U.S. new home sales for August fell by -4.7%, in stark contrast to a 10.6% increase in July.

Switzerland’s SNB decision to lower its policy interest rate to 1% from the previous 1.25%, as reported by the Swiss National Bank, indicates a shift towards a more accommodative monetary policy. The ZEW Financial Market Survey for September showed a continued negative sentiment, with the index dropping to -8.8 points from -3.4 points in August.

These economic findings are likely to create mixed pressures on the USD/CHF exchange rate. The positive U.S. GDP growth and uptick in pending home sales, combined with improved durable goods orders excluding transportation and slightly decreased unemployment claims, indicate economic strength which could strengthen the U.S. dollar. However, the stagnation in new durable goods orders and decline in new home sales might exert downward pressure. On the Swiss side, the SNB’s rate cut could weaken the Swiss franc, as lower interest rates generally make a currency less attractive to investors. Despite the franc’s potential weakening due to the negative sentiment reflected in the ZEW Financial Market Survey, the USDCHF dropped by -0.41% to 0.84646 on Thursday. This market move indicates that other factors might be influencing the pair, such as broader risk sentiment or USD-specific dynamics. Investors will likely watch the upcoming U.S. PCE Price Index data closely, as it could offer additional insights into the inflationary trends and impact future Fed policy decisions, potentially influencing USDCHF movements further.

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What can we expect from USDCHF today?

USDCHF on Thursday dropped -0.41% to 0.84646. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for USDCHF looks bearish as the pair posted lower in Thursday trading session.

Looking ahead for the day, immediate support level is at S1 0.84379 with break below could see further selling pressure towards S2 at 0.84112. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.85159 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.84502 would indicate selling pressure.

For the week to-date, take note that USDCHF is mixed as compared to the prior week.

Key levels to watch out:

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