USDCHF – Walking it Way to .9700?

Chart Of The Day

After bottoming out at .9200 in mid-February the Swissie has declined by 500 pips against the buck -- a stealth rally that has been hardly noticed. Although the franc remains the beneficiary of risk aversion flows, the move into the pair is becoming less frequent as the world adjusts to Trumps mad-dog tweets and realizes that most of them are bark not bite.

On the flip side, any further growth in NFPs should assure yet another rate hike by the Fed further blowing out the spread to +2.75% to the dollar and making the short carry ever more painful.

All of this suggests that barring any blow up in geopolitical risk or massive miss on the economic front, USDCHF should continue to crawl towards the .9700 figure over the near-term horizon.

NZDCAD – Flameout at .9700?

NZDCAD – Flameout at .9700?

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Although tomorrow the price action will be dominated by the FOMC rate decision, we also have RBNZ on tap and it could move the markets in kiwi pairs in a big way. Over the past several days NZD/CAD has been in a torrid uptrend boosted by continued carry trade flows into the kiwi and the weakness in CAD due to correction in oil.

Today, however, NZD/CAD traced out a classic shooting star formation that may be a hint of things to come if the RBNZ decides to jawbone the pair lower or worse the Fed surprises and hikes rates. A rate hike by the Fed would cause massive profit taking out of the carry while the CAD is unlikely to be sold so severely. Therefore, any sharp surprise from either central bank could push the NZDCAD pair down to .9500 while .9800 remains the upside.

AUD/CAD – 9700 is a Key Support

AUD/CAD – 9700 is a Key Support

Chart Of The Day

Fundamentals

The long and painful decline of the Aussie has been the story for the past three months, but lately the downtrend has stalled. Over the past week the declined in AUD have been far less violent and the pair has found support against many counterpairs including the CAD. For AUD/CAD the 9700 level has represented the Maginot line of support that the pair has not been able to breach for the past several weeks. This week the both currencies face important event risk that could determine whether this level holds or falls. In Australia the market will get a look at the latest RBA decision and the employment data. The RBA is unlikely to provide anything fresh to the market, but the labor data could be key especially because it will juxtapose against the Canadian data due at the end of the week. If Aussie numbers disappoint and Canadian numbers impress it could set up the the old North America vs. Asia trade and the 9700 level would give way.

Technicals

9700 remains the key level for AUD/CAD but a break there could open up a run all the way to 9500 while a break above 9800 would establish a near term bottom in the pair.