Swiss franc tops record highs

The Swiss franc continues to outperform, surging 1.18% against the greenback an hour into US trade. The swissie continues to benefit from haven flows as concerns about a slowdown in global growth and a possible downgrade of US sovereign debt have traders seeking refuge in lower yielding “safe haven” assets. The USD/CHF pair made fresh record lows below the 0.7730 mark and is likely to see further downside as risk appetite remains subdued. A break below interim support sees subsequent floors at the 0.77-figure, 0.7680, and 0.7630. Topside resistance now stands at the 100% Fibonacci extension taken from the July 19th and 27th crests at 0.7770 followed by the 76.4% extension at 0.7830 and 0.7875. The swissie is likely to continue to strengthen market sentiment remains on the defensive.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8341

20-Day SMA

0.8137

10-Day SMA

0.8003

2011 CHF High

Pending

The Australian dollar is the weakest of the lot early in North American trade, sliding more than 1.05% against the greenback. The losses come on the heels of dovish comments made by RBA Governor Glenn Stevens who cited that the pace of global growth is slowing and “it is appropriate under such circumstances for monetary policy to exert a degree of restraint.” As expected the central bank held the benchmark interest rate at 4.75% for a record eight consecutive meeting with the accompanying statement noting that board members, “remain concerned about the medium-term outlook for inflation,” and an, “acute sense of uncertainty,” with regards to global financial markets. The comments weighed on the Aussie as interest rate expectations dwindled with Credit Suisse overnight swaps now factoring in more than 44 basis points in rate cuts, up more than 22 basis points from yesterday. The AUD/USD broke below the 23.6% Fibonacci extension taken from the May 2nd and July 27th crests at 1.0930 before finding solace just above the 38.2% extension at 1.0840. A likely break here eyes downside targets at the 1.08-figure, backed by the 50% Fib extension at 1.0765 and 1.0710. Topside resistance is now seen at 1.0915, backed loosely by the 1.0930 and 1.0965. Traders will be closely eying Australian data overnight with June retail sales and trade balance figures on tap.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

1.0697

20-Day SMA

1.0800

10-Day SMA

1.0906

2011 GBP High

1.1079

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

Twitter: @MBForex
WEB:
www.fxcm.com

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.

Twitter: @MBForex
WEB: www.DailyFX.com

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