U of Mich Confidence

Yesterday, USD managed to retrace part of its losses from Wednesday due to better than expected Philly Fed Index as well as hawkish comments from Dallas Fed President Fisher that the Fed will raise interest rates if necessary. Right now, the outlook for future interest rates is still not clear, and so currency movements tend to be extremely exaggerated by each economic data release.

My hunch is that losses in EUR are likely to be limited, and EUR would test the upside soon again. EUR/USD has a very strong resistance at 1.2911 to surmount if it wants to continue its trend upward. But don’t trade with my hunch; trade with what you think the market is telling you. My hunch will most likely change too according to the latest market sentiment.

One more important US data for this week, which is the US Consumer Confidence at 1345 GMT (9:45pm sg time) tonight, which I guess will decide how the USD will close for the week. Another thing to keep at the back of your head is that CHF could find some support ahead of the Sep 14 SNB meeting whereby a 50 basis point rate hike is possible, which if it does happen, will narrow the interest differential between the CHF and USD.

As for trade inflows, UK will stand to benefit from its biggest export deal in 25 years as Saudi Arabia has just signed a GBP10 bln deal with UK to buy up to 72 Eurofighter Typhoon jets. GBP/USD could get support from this news.

Posted in Categories: Eurozone, Forex, Switzerland, UK, USA.

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