CHF weakens against USD, Euro following US employment data

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• The Swiss Franc is weakening in most of its pairs, but especially against the USD and GBP after the release of US Payrolls.
• Nonfarm Payrolls in November rose by 199K, higher than the 180K expected; Unemployment dropped to 3.7% and wages rose. 
• The data supported the US Dollar and riskier currencies against the safe haven Franc. 

The Swiss Franc (CHF) sold off in most of its major pairs on Friday after the release of a better-than-expected US jobs report supported risk appetite, driving flows away from the safe-haven Franc. The Swiss Franc has lost 0.56% against the US Dollar, while it is down 0.24% and 0.28% against the Euro and Pound Sterling, respectively.

Daily digest market movers: USD/CHF rises as Dollar gains boost from labor report

• The Swiss Franc is weakening versus the US Dollar on Friday after the release of the US Nonfarm Payrolls report shows the US created a higher-than-expected number of jobs in November, reflecting a strong labor market. 
• 199K new positions were filled, according to the US Bureau of Labor Statistics report, when a figure of 180K had been expected by economists. 
• The report also showed that the US Unemployment Rate fell to 3.7% in November, from 3.9% in October. No change had been expected. 
• Average Hourly Earnings came out at 0.4%, beating expectations of 0.3% and suggesting wage inflation pressures could be building. Hours Worked also rose, suggesting more full-time positions filled.
• The higher wage data and stronger employment metrics in general indicate the US economy is healthier than thought and that fresh inflationary pressures may yet emerge. 
• The data could make the Federal Reserve keep interest rates higher for longer and think twice before cutting interest rates. 
• Higher-for-longer interest rates will benefit the US Dollar since they are a magnet for capital inflows.
• The next big release for the US Dollar is the preliminary Michigan Consumer Sentiment Index out at 15:00 GMT, which is estimated to show a rise to 62 from 61.3 in December.  

Swiss Franc technical analysis: USD/CHF posts short-term reversal insignia

USD/CHF – the number of Swiss Francs that one US Dollar can buy – is trading higher on Friday after the release of Nonfarm Payrolls. 

The pair is rising after having completed a Measured Move price pattern during October and November. Measured Moves are three wave patterns that look like large zig-zags. The first and third waves are usually of a similar length. Wave C completed after achieving the same length as A. This further reinforces the bullish reversal since the December 4 lows.

US Dollar vs Swiss Franc: Daily Chart

The MACD has completed a bullish cross (circled) in negative territory, adding more evidence, signaling potentially more upside on the horizon.

The short-term trend is bullish, and more gains are possible. The next target is at 0.8825, which offers soft resistance. Then comes the confluence of major moving averages residing at 0.8900, where tougher resistance is expected.  

A break below the 0.8667 lows would negate the recovery and see bears back in charge, with likely losses to the 0.8552 July lows. 

Daily digest market movers: Haven Franc weakens after German inflation data, US jobs

• The Swiss Franc falls against the Euro on Friday as risk appetite pivots on better-than-expected jobs data from the US. 
• German inflation data comes out in line with expectations, with the country’s Harmonized Index of Consumer Prices (HICP) rising 2.3% YoY in November but falling 0.7% MoM, according to data from the Federal Statistics Office of Germany.
• Following lower-than-expected Eurozone inflation data as a whole, the German figures suggest a risk the European Central Bank (ECB) will cut interest rates, which is weighing on the Euro and limiting its gains.
• Lower interest rates tend to weaken a currency as they reduce capital inflows. 

Swiss Franc technical analysis: EUR/CHF rebounds from 2023 lows

EUR/CHF – the number of Swiss Francs that one Euro can buy – has rebounded after touching its lowest level for the year. 

Thursday saw the formation of a Bullish Engulfing Japanese candlestick reversal pattern (see rectangle on chart below) at a major support and resistance level, after the pair recovered from record lows. For the candlestick pattern to be confirmed, it would have to be followed by a green bullish day on Friday. This would provide a short-term bullish reversal signal.

Euro vs Swiss Franc: Daily Chart

The pair is in a downtrend on all key timeframes (weekly, daily, 4hr), however, suggesting bears have the upper hand overall and prices remain at risk of capitulation. 

A break below the 0.9403 lows would reconfirm the bearish bias and see prices fall into uncharted territory, with major whole numbers then expected to provide support at 0.9300, 0.9200, and so on.

Daily digest market movers: GBP/CHF declines after BoE survey

• The Swiss Franc falls versus the Pound Sterling pair on Friday after the US posts better-than-expected labor market data, easing global recession fears. This supports riskier currencies like the Pound Sterling over safe-havens such as the Swiss Franc.
• Earlier on Friday, the Franc had risen against the Pound after the Bank of England (BoE) published its Consumer Inflation Expectations survey, showing that the British public foresees inflation rising at a slower 3.3% pace in the year ahead, compared to the 3.6% recorded in the August survey. 
• The report reflects hopes that inflation may be coming down, and if materialized will mean the BoE will have more incentive to decrease interest rates.   
• Lower interest rates are generally negative for a currency as they deter inflows of foreign capital. 
• The market view of the course of future interest rates in the UK has turned more dovish recently in line with most of the rest of the world. Traders in interest rate futures saw a relatively high chance of the BoE cutting interest rates by 0.75% (three 0.25% cuts) in 2024, as per data reported on Thursday, December 7. 

Swiss Franc technical analysis: GBP/CHF trading at range lows

GBP/CHF – the number of Swiss Francs that one Pound Sterling can buy – is in a sideways trend on short and long timeframes, whilst the medium-term trend could be classified as very marginally bullish. 

On the 4-hour chart used to analyze the short-term trend, the pair is bouncing up and down within the parameters of a range-corridor between 1.0990 and 1.1155. 

Pound Sterling vs Swiss Franc: 4-hour Chart

More recently it seems to have found a floor at the lows of this range. The pair has just formed a bullish Hammer Japanese candlestick formation (see rectangle in chart above) and is seeing strong bullish follow-through in the period that follows. This provides confirmation of the short-term bullish signal.

It is possible to see the outline of a complete measured move in the zig-zag of price action down from the November 29 high, with wave C completing at the November 7 low. 

The MACD has risen above its signal line whilst well below the zero-line, further adding weight to the short-term bullish outlook. Indeed, looked at throughout December, the MACD looks like it might have formed a wide double-bottom bullish reversal pattern, further amplifying the strength of the current crossover buy signal.

All in all, the short-term chart suggests the GBP/CHF pair is turning around at the bottom of a range and beginning a bullish ascent back up to the range highs at 1.1155. A break above the 1.1040 level would provide further confirmatory evidence a new leg higher was underway.