Buy USD with CHF
By Peter Rosenstreich
The Swiss franc remains a solid short against the US dollar (and the Euro). Accelerating outflows and dropping FX hedge ratios will further weaken the CHF, but the main reason is that as the Swiss National Bank unwind its FX reserves, the franc will become less overvalued. We expect the current bullish trend will extend to 1.02 CHF per USD.
Switzerland’s purchasing managers’ index in September came in higher than expected, its highest level since 2011. Last week’s leading economic indicators jumped heartily. Consumer price inflations has been slowly creeping higher. Should inflation continue as such, it should hit the SNB’s target of 2% in early 2019. The central bank faces interesting policy choices in 2018.
Buckle up for CME’s Bitcoin futures trading
By Arnaud Masset
As Bitcoin hit new all-time highs last night, the Chicago Mercantile Exchange Group said it will enable trading in Bitcoin futures by yearend. The move by such a well-known, established exchange throws open the doors for institutions to get into Bitcoin. So far, they have been reluctant to plunge into cryptocurrencies. Still, traditional investors will remain cautious and will not rush. Too, the CME will likely require high margins. In the long-term, this fresh flow of money can send the price of Bitcoin in only one direction: up.
Bitcoin’s has maintained been solid since mid-September as it rose more 100% to a fresh high of $6,466.52. Although a downside correction would be considered as healthy, even necessary and should not be ruled in the short-term, the Bitcoin rally is far from over.
Employment figures might weaken USD short term
By Yann Quelenn
Soft employment data to be released later today could weigh on the US dollar, because it might spur the US Federal Reserve to reconsider its interest rate hike in December.
The Fed’s Open Market Committee meets today, against the backdrop of the new Chair to replace current Chair Janet Yellen early next year and a December rate-boost priced in at 66.8%. The ADP National Employment Report for September, to publish today, is likely to come in below expectations, which will add downside pressures on the greenback.
However, this could be very short-term, because on Friday the Non-Farm-Payrolls report will publish, which might refute ADP. ADP has a history of spectacular misses for predicting NFPs over the past months. Last time, ADP predicted 135,000 new jobs, yet NFPs came in negative.