Earlier this morning, the Swiss Franc surged up strongly, along with the gold price as disappointing economic data from China raised concerns about financial instability, which has triggered demand for safe haven assets.
As reported by the China Academy of New Supply-side Economics, Chinese Minxin Manufacturing index dropped from 41.8 to 37.5 in February, whereas the non-manufacturing index fell to 37.5 from 43. As a result, PBOC is speculated to take further easing or even another devaluation of the yuan.
USDCHF was trading at 0.9961 at 4:55 A.M GMT, down nearly 4% compared with the opening price.
The U.S dollar has continually become stronger against the Euro and the Pound recently due to uncertainty about the destiny of the UK in the European Union, which consequently put pressure on the Swiss Franc.
At 12:15 p.m. GMT, Swiss National Bank (SNB) Governing Board Chairman Thomas Jordan is scheduled to speak on "Monetary Policy in the neighborhood of the Eurozone". The investors will try to take away some hints for the future of interest rate policy from his speech. It is highly likely that The Swiss Overnight rate stands still at -0.75% without any unexpected adjustment for long term.
Later, U.S. Consumer confidence and Existing Home Sales report is due at 3:00 p.m GMT. The numbers are expected to improve from the previous month, which may support the U.S. Dollar further, recovering from earlier losses.
Fig USDCHF Daily Technical Chart
USDCHF has fallen off from as high as 1.0003 and is trying to test the support at 0.9959. Stochastic has retreated from the overbought area which suggests a reversal to collapse. The pair is predicted to break through the Fibonacci 50.0 level, heading towards the 38.2 fib level.
In the case of better-than-expected data from the U.S. consumption and housing markets, USDCHF may continue its previous rally, flying to the Fibonacci 61.8 level.
Buy Digital Put Option at 0.9926 and Digital Call Option at 1.0027.