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USD/CHF bears in control, news of US tariffs on Chinese imports supports CHF

  • US/China trade deal could be a disappointment depending on the detail.
  • USD/CHF bears getting set for a break below long term support.

USD/CHF is bleeding as we move through the New York session. The pair has been on the back foot since topping out around 0.9760, shedding around 100 pips, so far. At the time of writing, the pair is trading at 0.9671, a touch off from the lows of the day down at 0.9665 following a rejecting at the 50-hour moving average just below the 0.9713 highs and Asia rejection at the 200-hour moving average. 

The Swiss franc is picking up what could be the start of a mass exodus from risk-on asset classes as trader's nerves set in following expectations that the phase-one deal will be nothing more than a cease-fire accord. The devil will be in the details when announcements are expected to be made around the signing ceremony on the 15th Jan between the US and China. 

US tariffs likely to stay in place, bearish for risk appetite, CHF bullish

The latest chatter came late in the New York day when reports that existing tariffs on billions of dollars of Chinese goods coming into the US are likely to stay in place until after the American presidential election. 

"Any move to reduce them will hinge on Beijing’s compliance with the terms of a phase-one trade accord, people familiar with the matter said,"

Bloomberg News reported.

When coupled with today's slight disappointment in the US Consumer Price Index numbers, which reinforces the Fed neutral policy, it's little wonder that flows are supporting CHF. It would also be prudent to note that CHF net shorts have fallen for five consecutive weeks which could signal a start of a protracted downtrend in USD/CHF should all of those position switch net long CHF, attributing to a downside breakout below the Aug and Dec 2019 support line between 0.9659/64 respectively.

USD/CHF levels

 

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