Daily FX Market Analysis

USD/CHF: below the balance line

JPY. As expected, today the Bank of Japan saved its monetary policy unchanged. Despite the fact that the outlook for the economy has improved, inflation, according to the bank, still lags behind the forecasts. By a majority of votes, the BOJ Board voted to maintain the key rate at the level of -0.1% and the volume of government bonds purchase amounting to 80 trillion yen per year. The Nikkei 225 Stock Average index on the basis of trading in Asia rose by 0.5% to 19249.00. The pair USD / JPY is trading at a growth, by 15 points, increase by the end of today’s trading day after volatility within 58 points.

EUR. The ECB also saved interest rates and incentive measures unchanged. “The incoming data reinforce our confidence that the observed economic growth will continue to strengthen and expand,” however, “the risks … are still shifted downward, and they are primarily related to global factors,” said ECB President Mario Draghi at a subsequent press conference. While according to the data published on Thursday, trust among companies and consumers is at the highest level since August 2007. The euro reacted with a decrease in comments by Mario Draghi and the decision of the ECB. The EUR / USD fell by the end of the trading day by 0.5% to the level of 1.0870.

Oil. The International Energy Agency (IEA) provided the The Wall Street Journal with brief data on a comprehensive analysis of the trends in oil supply and demand in the short term. In the next five years, according to the IEA, the production of shale oil in the US will grow by 2.3 million barrels per day or more, but this will not be enough to compensate for the decline in oil production in other regions. IEA believes that in the near future, the growth in world oil demand will continue, and the current surplus of oil supply may be replaced by a deficit.
On Friday at 17:00 (GMT) the data will be published from the American oil company Baker Hughes about the change in the number of drilling rigs in the US over the past week. In US oil production is growing rapidly. The number of active drilling oil rigs in the US has been increasing since June and is already 688 units. The next growth of installations will negatively affect oil prices.

Gold. Quotes of gold the second day are near the mark of 1264.00 dollars per troy ounce. The fundamental factors equalize each other, and investors, it seems, are still hesitant about the further direction of the price movement for gold. Perhaps, these drivers will appear on Friday, when at 12:30 (GMT) a report of the Bureau of Economic Analysis of the US government will be published with preliminary data on GDP for the first quarter. A strong report will positively affect the quotations of the dollar and negatively – on the quotations of precious metals and, in particular, gold. Weak GDP report again will raise the demand for gold. Prediction: the annual US GDP grew in the first quarter by 1.3%

Overview and dynamics

In the course of tomorrow’s European session at 07:00 (GMT) the index of leading indicators KOF for April will be published, which will show the development of economic activity in Switzerland in the near future. This indicator is considered an indicator of economic stability in Switzerland, and its high value positively affects the quotes of the franc. If the forecast (107.8 in April against 107.6 in March) is confirmed or better, the franc will strengthen on the foreign exchange market.
Later at 08:00, the speech of the head of the National Bank of Switzerland, Thomas Jordan, will begin. In the course of his speech, the volatility of trading on CHF is rising, and traders are waiting for signals about further plans for monetary policy of the NBS. The central bank itself has consistently advocated a soft monetary policy in the country, and the currency rate has traditionally been considered “overvalued.” At the same time, the bank reserves the right to intervene in trading on the foreign exchange market with sales of the franc if its rate starts to rise sharply. On the currency interventions, the NBS never notifies, neither before nor after the intervention. Recently, the franc has largely lost the status of a safe haven, and the threat of intervention certainly holds the franc from excessive growth.
Despite the fact that since the beginning of the month the pair USD / CHF has decreased, nevertheless, there is clearly not enough strong momentum for further decline. The indicators OsMA and Stochastics on the 4-hour and daily charts are deployed to long positions. The pair USD / CHF on the daily chart is between the support level 0.9920 (the bottom border of the uplink) and the resistance level (balance line) 0.9960 (EMA200 and the Fibonacci level of 23.6% of the upward correction to the last global decline wave since December 2016 and from the level of 1.0300).
In case of a return above the balance line of 0.9960, the positive momentum of the USD / CHF pair’s dynamics will increase, and the pair’s growth may continue within the upward channel on the daily chart with the upper border passing above 1.0125 (Fibonacci level 61.8%) and 1.0165 (highs 2017).
The reverse scenario will be related to the breakdown of the support level of 0.9920 and the decrease to the lows of 2017 at the 0.9850 mark.
Much of the dynamics of the pair USD / CHF will still depend on the overall dynamics of the dollar in the foreign exchange market.

Support levels: 0.9920, 0.9850, 0.9820
Resistance levels: 0.9960, 0.9990, 1.0020, 1.0075, 1.0125, 1.0165