CHF: USDCHF Notably Lower Following Swiss CPI, 50-day EMA Remains Key Support
Feb-13 10:24
- Swiss Franc strength is standing out on Thursday, underpinned by the hotter core CPI print and the aforementioned hawkish SNB repricing. A softer greenback has exacerbated the USDCHF (-0.68%) selloff, which picked up momentum beneath yesterday’s low at 0.9103. Moderate but steady progress south has seen the pair trade to the lowest levels of the week in recent trade.
- Earlier we pointed out trendline support just above 0.9040, but it is the 50-day exponential moving average that remains key on the downside, having underpinned the significant rally in the aftermath of the US election. Despite multiple attempts in recent weeks, USDCHF has continually failed to close below this average, which currently intersects at 0.9024. Below here, the January low is at 0.8965.
- EURCHF made another test above 0.95 just before the data, as optimism surrounding a potential conclusion to the Russia/Ukraine conflict bolsters the single currency. However, following the data, EURCHF now resides 50 pips off the highs ~0.9460. Several tests above the 0.9500 handle dating back to September have proved short lived.
- CHFJPY has extended an impressive 2.2% recovery from Friday’s low, and today’s high print has matched an initial resistance point at 169.75 (20-day EMA). A stronger reversal would target a move to 171.20.
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US INFLATION: MNI US CPI Preview: Still Too High For Comfort
Jan-14 10:15
Our preview of Wednesday's December CPI release has been published (PDF):
- Consensus sees core CPI inflation decelerating slightly to between 0.2 to 0.3% M/M in December, with MNI’s analyst review pointing to an average estimate of 0.24% so a bias toward a 0.2% rounded figure.
- Likely to be the single most closely watched individual aspect of Wednesday’s CPI report, rental inflation is expected to accelerate to an average figure that firmly rounds to 0.3% M/M in December.
- Supercore inflation is seen pulling back, though, to the upper 0.20s%, from 0.34% in November.
- If housing is our top pick to watch this month then core goods inflation – which is seen pulling back in December - is closely second, amid tariffs speculation.
- Initial estimates point to core PCE inflation at ~0.20% M/M, softer in outright terms but on a relative basis an acceleration from the softer 0.115% in Nov. That outlook will hinge partly on PPI data out Tuesday.
- It is clear that the Fed will hold in January, with the first plausibly “live” meeting not until March. But with pricing having shifted so quickly away from 2025 cuts, it’s a good juncture to assess whether markets have gotten too hawkish.
- Even in-line inflation readings could bolster the FOMC leadership’s confidence that they are on track to get PCE to 2%, and leave the door open to two rate cuts later this year, though this report is not widely expected to provide the requisite evidence.
