A failure of follow-through on the rumors of a surprise SNB rate increase coupled with uncertainty over the fate of the US economy as the Fed shifts to neutral amid record-setting weakness in the US labor market has seen USDCHF settle into a range.
[B]Trading Tip – Labor market statistics have gained particular prominence as last month’s US unemployment rate saw its largest gain in 22 years. Consumer price gains for Switzerland may also increase volatility as the SNB has been rumored to issue a one-off rate increase. Traders may want to exert particular caution around these releases, with the most conservative opting to remove pending entries until the event risk has passed. In addition to a stop loss, we will look to control risk further by removing any unfilled orders by the end of the week or should spot close above 104.53.[/B]
[B]Event Risk for the US and Switzerland[/B]
[B]US[/B] – Significant US data releases begin this week with the June ISM Manufacturing Index. The metric is expected to decrease further, coming in at 49.0 from a previous 49.6. Values greater than 50 generally indicate expansion while values below 50 indicate contraction. At the top of the radar is Thursday’s release of the June Change in Nonfarm Payrolls, which is expected to print at -55k from April’s -49k. Last month’s release saw the largest one month jump in the unemployment rate in 22 years as the metric rose to 5.5%. Unemployment is expected to ease a bit this time around, printing at 5.4% though the economy is still seen losing -55k jobs…
[B]Switzerland [/B]– The only major data release this week is the CPI for June, expected to increase to 3.1% (YoY) from 2.9% the month prior. As inflation creeps away from the SNB target of 2.0% significant increases in the CPI may provide the bank with substantial enough reason to raise rates during their next meeting.
[I]To contact Ilya and Luis with comments regarding this or other articles they have authored, please email them at <[email protected]>.[/I]