The US Durable Goods Orders read higher than expectations rising from -6.1% to +1.4%. Core Goods Orders also rose and were slightly higher than the 0.4% expectations.
The day’s weakest currency remains the Swiss Franc within the first three trading sessions. This is largely due to the central bank’s decision to cut 0.25%, taking the Policy Rate to a 12-month low.
The USA100 remains at the “neutral” level and receives no buy/sell signals. What can trigger volatility?
The CM Fedwatch Tool indicates there is no longer the possibility for a rate cut in May 2024.
USDCHF –Swiss Franc The Worst Performing Currency For Tuesday!
The US Dollar is trading with no clear direction within the first two sessions of the day. However, the Swiss Franc is the worst performing currency of the day resulting in a clear direction for the asset. The USDCHF is forming its third consecutive week of bullish price movement. The price of the exchange rate trades above the regression channel and above the main price sentiment lines. Both these elements point towards buyers controlling the market, which makes sense considering the Swiss National Bank has just cut rates. However, a concern is also that Oscillators are “overpriced” and the latest impulse wave matches previous waves before forming a retracement. For this reason, technical analysis points towards a retracement but continued control from buyers of the Dollar.
The switch to Dollar strength could be influenced by the decision of the Swiss National Bank to reduce borrowing costs by 25 basis points while analysts expected the value to remain at 1.75%. The accompanying statement noted that inflation had not exceeded the target level of 2.0% for several months, and experts did not expect changes in these dynamics. Moreover, at the end of 2025, department analysts revised forecasts for the consumer price index from the previous 1.9% to 1.4%. Investors expect at least two more interest rate cuts before the end of the year according to reports.
The US Dollar Index, on the other hand, even though trading lower than the day’s opening price, has been gaining bullish momentum over the past 3-hours. The Durable Goods Orders data supports the US Dollar, but other data is less positive. This includes the CB Consumer Confidence which read lower than expectations. Based on the 75-Bar EMA and the RSI on a 15-Bar Period, the USDCHF has been receiving indications of upward price movement since early March 21st.
USA100 – Will Investors Honor the Price Range?
The price of the USA100 does not obtain any clear signals on larger timeframes from breakouts and momentum indicators. Though in the short-term buyers are pushing the price higher. Even though the index has not seen any serious setbacks, the asset is under pressure from less frequent rate cuts in 2024 and a late rate cut. Most economists now believe the Fed will cut for the first time in June and not May 2024!
Last week, the US Federal Reserve decided to keep the interest rate between 5.25% and 5.50%. This didn’t surprise investors much because they had already anticipated this decision. However, Mr Powell, the Chair of the Fed, said that they plan to lower interest rates three times by the end of the year. The first cut is likely to happen around the summer.
Lastly, another concern for investors is that the Bond Market is witnessing bond yields rise over the past hour. This is known to put pressure on the stock market as can a more expensive Dollar. Another concern is that from the NASDAQ’s components holding more than a 1.00% weight, 11 are trading lower during the pre-trading hours. Therefore, investors may honour the established price range in the short-term.
Michalis Efthymiou
Market Analyst
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