U.S. dollar traders are busy positioning themselves ahead of the closely watched U.S. CPI release!
Will the event make or break USD/CHF’s days-long range?
We’re looking at USD/CHF’s 15-minute setup today!
Before moving on, ICYMI, yesterday’s watchlist checked out GBP/USD’s downtrend after the U.K. jobs release. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. NFIB Business Optimism Index: 91.3 (91.7 forecast; 91.9 previous); “Inflation remains top business problem”
Japanese large manufacturers’ sentiment strengthened from -0.4 to 5.4 in Q3 2023, large non-manufacturers index climbed from 4.1 to 6.0
Japan’s producer price inflation slowed down from 3.4% y/y to 3.2% y/y in August as the cost of utilities fell
Chinese property giant Country Garden gets maturity extension approval for one more onshore bond
U.K.’s GDP surprisingly contracted by 0.5% m/m in July (vs. -0.2% expected, 0.5% previous) after strikes in hospitals and schools as well as unusually rainy weather weighed on output
U.K.’s industrial production fell by 0.7% m/m in July (vs. 1.8% m/m in June); with declines recorded in 3 out of 4 production sectors
U.K.’s total trade in goods and services deficit widened by 1.2B GBP to 18.8B GBP in the three months to July, as exports saw a larger fall than imports.
Price Action News
With not a lot of fresh catalysts in the early Asian session, traders caught up to their European counterparts from the previous day and priced in a risk-averse trading environment.
AUD dropped across the board at the start of the trading session and failed to find support from China’s Country Garden getting approval to delay another bond payment.
The commodity-related currency saw a bit of profit-taking halfway through the session, though, and has managed to recoup some of its losses against its major counterparts.
The Aussie remains in negative territory but is making progress against EUR, JPY, CHF, and GBP.
Eurozone’s industrial production at 9:00 am GMT
U.S. CPI reports at 12:30 pm GMT
U.K. CB leading index at 1:30 pm GMT
U.S. Federal budget balance at 6:00 pm GMT
U.K. RICS house price balance at 11:01 pm GMT
Japan’s core machinery orders at 11:40 pm GMT
Australia’s MI inflation expectations at 1:00 am GMT (Sept 14)
Australia’s labor market data at 1:30 am GMT (Sept 14)
Japan’s final industrial production at 4:30 am GMT (Sept 14)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
In a few hours, we’ll see the U.S. CPI report for the month of August.
Word around is that we’ll see much higher headline numbers thanks to higher oil prices, but that core CPI may see some pullback from its 4.7% y/y July reading.
If core consumer prices don’t decelerate fast enough for the markets, or if the headline CPI comes in WAYYY higher than expected, then we could see more USD bulls come in as traders price in another rate hike or at least a prolonged period of high interest rates from the Fed.
USD/CHF could bust above its days-long range and head for previous areas of interest like .8950 or .8990.
I’m not ruling out a buy-the-rumor, sell-the-news situation though.
If traders focus on a possibly weaker core CPI reading, then we may see some profit-taking from all the USD buying from the previous days.
USD/CHF could find resistance from the .8930 range resistance level that is also near the R1 of the 15-minute chart’s Pivot Point levels.
The pair could drop to the .8920 mid-range zone or head for the .8900 major inflection point depending on the dollar’s momentum.
What do you think? Which economic reports will traders focus on? More importantly, which way will USD trade after today’s release?