Swissie surges on U.S. GDP while loonie plummets

The Swiss franc topped performance charts hours into a volatile North American trading session, advancing more than 1.55% against the greenback. A weaker than expected 2Q GDP report saw traders jettison the dollar across the board with the swissie and the yen the primary benefactors of heightened risk aversion flows. The report showed the US economy growing just 1.3% q/q missing calls for a print of 1.8%, with the previous 1.9% q/q read downwardly revised to a dismal 0.4% q/q. The data suggests that the domestic economy continues to lag and remains well below expectations. The franc surged to record highs against the dollar after breaking below interim support at the 61.8% Fibonacci extension taken from the July 1st and 19th crests at the 0.80-figure. The pair continued to plummet, sailing through the 76.4% Fib extension before finding solace at the 0.7860 level, where interim support now stands. Subsequent floors for the pair are seen at the 100% extension at 0.7830 and the 0.78-figure. Topside resistance is now eyed at the 76.4% extension at 0.7935, backed by the 0.80-handle.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8382

20-Day SMA

0.8205

10-Day SMA

0.8093

2011 CHF High

Pending

The loonie plummeted across the board on an even worse GDP print that showed the domestic economy contracted last month by 0.3% m/m, missing calls for a positive print of 0.1% m/m. The year on year figure also missed estimates with a read of 2.2% versus expectations for a print of 2.8%. The data weighed heavily on the loonie which fell against the dollar, despite the dismal US GDP read. The USD/CAD pair broke above the 61.8% Fibonacci extension taken from the July 8th and 26th troughs at 0.9540 before running out of steam just above the 76.4% extension at 9585. With traders continuing to dump the dollar against all its major counterparts, expect this level to hold noting interim support at the 61.8% extension, backed by the 50% Fib extension at 0.9515 and the 38.2% extension at 0.9490. Topside resistance holds at the 0.9585 mark, noting subsequent ceilings higher at the 0.96-figure and the 100% extension at 9620.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.9677

20-Day SMA

0.9555

10-Day SMA

0.9495

2011 CAD High

0.9406

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
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About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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