USD/CHF remains best described as in a consolidation phase and is currently trading higher within the range at 1.0152 up 0.36% from Tuesday’s North American close. The pair is higher following a successful test of support earlier in the week.
On Monday, the pair came under selling pressure, but found support in the vicinity of the former rally high established in March. The pair rebounded from that level and, given the ability to hold this near term support, the current target for the pair is at the high established in last week’s trading at 1.01917.
Should USD/CHF break out to new highs, the next target is at the high established in late February at 1.02564. Given the ongoing bullish outlook for the dollar, an eventual move to this resistance is expected. And, not far above this level is key resistance at the November 2015 top at 1.0330. A breakout above this level would improve the long term outlook for USD/CHF.
On the downside, first support is now at the reinforced level defined by the March 9 spike high at 1.00925. Monday’s low, by comparison, was at the 1.00796. This zone now represents support on another near term pullback. Holding this area would keep the pair well-positioned to resume the advance from the November low over the near term.
Recent strong economic data has supported the potential for an interest rate increase at the December FOMC meeting. At present, fed fund futures are pricing in a 91.7% probability of a rate increase at the December meeting. The dollar is currently trading at 101.16, up 0.17%.
In today’ news, the November Swiss KOF index declined to 102.2 from a revised 103.9 in October, which was originally reported at 104.7. The latest reading was also lower than market expectations of a figure around 104.3 although it remained above the long-term average.
Today in the US, several economic data releases are on the calendar. At 8:15am EST, the ADP employment report for November is expected to show an increase of 160K jobs, from 147K last month. At 8:30am, EST Personal Income/Spending for October and the PCE Price Index are due to be released. These figures will factor into Q4 GDP estimates, as well as the interest rate decision in December. Consensus forecast is for Personal Income at 0.4% and Personal Spending at 0.5%. The Core PCE Price Index is forecast unchanged from the prior reading at 0.1%. Chicago PMI for November is then due at 9:45am EST. It is forecast at 52.0 following a reading in October at 50.6. Pending Home Sales for October is due at 10:00am EST (expected to rise by 1% month-over-month from 1.5% in September), followed by the Fed’s Beige Book at 2:00pm EST.
The latest Commitment of Traders report from the CFTC was released on Monday, with data as of the November 22nd close. The report indicated that large speculators increased long positioning of Swiss franc futures by 2,510 contracts and increased short positioning by 3,216 contracts. The current net short positioning of large speculators now stands at 22,900 Swiss franc futures contracts. This represents an increase in net short positioning of 706 contracts over the reporting period.