The top mover report has been rather hard to write this week. Primary reaction is that the forex markets are generally in consolidation mode, indecisive. Right now CHF/JPY is the top mover but the picture could change in an hour. Nevertheless, it’s a pair that’s worth some discussion.
We’ve pointed out in various occasions that while both CHF and JPY are safe haven currencies, there are some fundamental differences in the way they react, at least this year. Yen is more sensitive to yields, spread with US, EU etc. Plus, it’s more sensitive to Asian markets. On the other hand, Swiss Franc is more sensitive to emerging market risks.
For example, today’s fall in USD/TRY, thanks to Powell, could be a reason for weakness in the Franc. For Yen, Nikkei closed up 0.69% today. JGB yields dropped to 0.09. But Chinese stocks closed down -1.32%. Yen’s strength is probably more due to position adjustment ahead of the main event of Trump-Xi meeting, as well as month end.
Anyway, it does look like CHF/JPY’s corrective rise from 111.55 has completed with three waves up to 114.41. It came after hitting 100% projection of 111.55 to 113.74 from 112.19 at 114.38, as well as the near term channel resistance.
Focus is back on 113.04 support for the near term. Firm break there will raise the chance of resuming whole decline from 118.06 through 111.55 low to 61.8% projection of 118.06 to 111.55 from 114.41 at 110.38.
Fed Powell bowing down to dictatorship political pressure. Fed slowing or even pausing after December’s hike. There would less drain from the emerging markets. Swiss Franc will benefit more than Yen. It’s a possible scenario. Let’s see how it plays out.
