EUR/CHF Upside Breakout in Otherwise Dull Markets

EUR/CHF is providing some excitement in otherwise dull markets today. The cross finally breaks out from the sideway pattern started back in October. Some buying is also seen in Euro against Sterling and Aussie, but it’s staying in very tight range against the greenback. Indeed, Euro and Dollar are currently the strongest ones for the day, , followed by Loonie and Aussie. Swiss Franc is the worst, followed by Kiwi and then Yen. Overall, still, most traders should be waiting for tomorrow’s US CPI before taking a larger bet.

Technically, one focus is now on 1.1265 minor resistance in GBP/CHF, if selloff in CHF intensifies. Break there will argue that the corrective pattern from 1.1574 has completed with three waves to 1.1094, and bring retest of 1.1574 high. But of course, as EUR/GBP is also on the verge of breaking through 0.8876 resistance, GBP/CHF might be capped if Sterling is under similar pressure against Euro.

In Europe, at the time of writing, FTSE is up 0.63%. DAX is up 0.93%. CAC is up 0.89%. Germany 10-year yield is down -0.0905 at 2.220. Earlier in Asia, Nikkei rose 1.03%. Hong Kong HSI rose 0.49%. China Shanghai SSE dropped -0.24%. Singapore Strait Times rose 0.226%. Japan 10-year JGB yields dropped -0.0062 to 0.506.

ECB Villeroy: France should avoid hard landing

ECB Governing Council member Francois Villeroy de Galhau told Radio Classiqu, “activity in France is showing a better than expected resistance,” and a hard landing should be avoided. He expects inflation in France to peak in H1 2023, then falls back to 4% towards the end of the year.

Villeroy also said that ECB should aim to reach terminal interest rate by summer, and emphasized the need to be pragmatic about the pace of tightening.

BoJ Public Survey: 32.5% expects prices to go up significantly, up from 28.9%

According to BoJ’s December Survey on the General Public’s Views and Behavior, 32.5% of respondents expect prices will go up significantly one year from now, up from September’s survey of 28.9%. Those expecting prices to go up slightly dropped to 52.5%, down from 56.8%. Together, those expecting prices to go up dropped to 85.0%, down slightly from 85.7%. Only 2.4% expects prices to go down.

Regarding economic condition one year from now, those expecting improvement dropped to 9.1%, down from 10.5%. Those expecting unchanged dropped to 44.4%, down from 46.0%. Those expect worsening conditions rose to 46.2%, up from 42.9%. DI dropped to -37.1, down from -32.4.

Australia monthly CPI rose back to 7.3% yoy in Nov, ongoing inflationary pressures

Australia monthly CPI accelerated from 6.9% yoy to 7.3% yoy in November, above expectation of 7.2% yoy.

Michelle Marquardt, ABS Head of Prices Statistics, said “This month’s annual movement of 7.3% compares to 6.9% in October and 7.3% in September, indicating ongoing inflationary pressures.”

The most significant contributors to the annual rise in November were Housing (+9.6%), Food and non-alcoholic beverages (+9.4 per cent), Transport (+9.0%), Furniture, household equipment and services (+8.4%) and Recreation and culture (+5.8%).

Australia retail sales rose 1.4% mom in Nov on Black Friday sales

Australia retail sales rose 1.4% mom in November, well above expectation of 0.7% mom. The seasonally adjusted turnover of AUD 35.92B was a new record high.

Ben Dorber, ABS head of retail statistics, said, “While we typically see a rise in spending around Black Friday sales, the strong seasonally adjusted rise in November 2022 shows that the effect is increasing over time, as the event has become more common across retailers and sales periods become longer.”

“Given the increasing popularity of Black Friday sales, the smaller increase in October may reflect consumers waiting to take advantage of discounting in November, particularly in light of cost-of-living pressures.”

EUR/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9883; (P) 0.9899; (R1) 0.9922; More….

EUR/CHF’s break of 0.9953 resistance finally confirms resumption of whole rise from 0.9407. Notable support from 55 day EMA is a bullish sign. Intraday bias is back on the upside. Further rise should be seen to 61.8% projection of 0.9407 to 0.9953 from 0.9720 at 1.0057, which is close to 1.0072 medium term fibonacci level. On the downside, below 0.9896 minor support will dampen the bullish case and turn intraday bias neutral first.

In the bigger picture, as long as 38.2% retracement of 1.1149 to 0.9407 at 1.0072 holds, price actions from 0.9407 medium term bottom will be treated as a corrective pattern. That is, long term down trend would resume through this low at a later stage. Nevertheless, firm break of 1.0072 will also have 55 week EMA (now at 1.0041) taken out. That would be an initial sign of long term bullish reversal.

Economic Indicators Update