Dollar fall resumes
First estimates of US Q3 GDP shows the US economy expanded a mere 1.6%, down from prior quarter’s 2.6%, much lower than expectation of 2.2% and being the slowest advance since 1.2% in Q1 of 2003, more than 3 years ago.
The biggest downside surprise was the 17.4% contraction of residential housing construction, which is the biggest decline since the first quarter of 1991. PCE core, an inflation gauge favored by the Fed, increased 2.3%, slower than prior 2.7% and expectation of 2.6%. However, consumer spending, which accounts for roughly two-thirds of national economic activity, grew 3.1%, up from 2.6% in Q2.
Generally speaking, the report Fed’s view as delivered in the FOMC statement earlier this week that economy will still have moderate expansion, mainly due to solid consumer spending but inflation is seen continuing to cool down. That is, it’s supportive to the view that Fed could hold rates unchanged till mid next year. Dollar resumed weakness across the board.
USD/CHF
Daily Pivots: (S1) 1.2484; (P) 1.2568; (R1) 1.2614; More.
USD/CHF’s fall resumes in early US session after earlier recovery was limited below mentioned 1.2587 resistance. Break of 1.2520 low has pushed USD/CHF to as low as 1.2467, meeting mentioned downside target of 100% projection of 1.2768 to 1.2548 from 1.2704 at 1.2484. At this point, further decline is expected to follow as long as USD/CHF stays below 1.2520 support turned resistance. Next downside target will be 1.2404 cluster support (61.8% retracement of 1.2182 to 1.2768 at 1.2406). Above 1.2520 will indicate an intraday low is formed and turn outlook consolidative first.
In the bigger picture, USD/CHF’s medium term rebound from 1.1919 extended to as high as 1.2768, meeting upside target of 61.8% retracement of 1.3283 to 1.1919 at 1.2762 already. The whole rise from 1.2291 has completed at 1.2768 already. On the downside, break of 1.2404 cluster support will bring retest of medium term rising channel (now at 1.2356).
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.
Shing-Ip Tsui is the founder and CEO of
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