USD/CHF was carried aloft by renewed risk appetites early in Q2. CHF funded carry trades were all the rage today as stock markets around the globe rallied, helped in part by signs of life in the US housing market. US equities jumped around 1% and EUR/CHF surged to a fresh all-time high of 1.6299.
Talk of 1.6300 barriers as well as supra-national sales of EUR/CHF helped stall the gains ahead of the figure. USD/CHF was aided by profit-taking on EUR/USD and GBP positions from quite overbought levels. The rally came close to Friday's 1.2240 highs before stalling, topping out at 1.2233. Particularly helpful to the carry trade was this morning's ultra-low Swiss CPI figures.
Year-over-year CPI rose a scant 0.2%, suggesting the SNB can continue to slowly take away the abnormally accommodative levels of liquidity in the markets. A break of the 1.2240 area targets a test of the 200-day moving average at 1.2270 ahead. 1.2190/00 is first support on dips with more at 1.2170. Small stops are scattered below each of those levels. Non-manufacturing ISM figures are due out Wednesday, seen up to 56.0 from 54.3.
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