On the morning of October 1 at 08:50 MSK, the USD/CHF pair rose to 0.8367. This is the highest level in 16 months.
The growth has continued for the seventh trading session in a row. The franc is losing ground amid worsening expectations for the Swiss economy.
What is happening with the Swiss economy
The main indicator is the ZEW expectations index. This is a survey of investors about what they expect from the economy in the coming months. In September, the index fell to 2.6 from 12.1, the lowest level in three months. For the franc, this is a signal of weakening expectations for the domestic economy, rather than the usual rise in demand for the currency as a safe-haven asset.
What the SNB is doing
The second factor is the position of the Swiss National Bank, SNB. At its meeting on September 24, the regulator kept the rate at 0%. The SNB also confirmed its readiness to intervene in the foreign exchange market if necessary. The zero rate and the central bank's ability to intervene in the foreign exchange market continue to put pressure on the franc and support USD/CHF.
What is happening with the dollar
At the same time, fundamental support for the dollar remains mixed. US inflation for August came in below forecasts. Overall PCE rose by 0.3% month-over-month against expectations of 0.4%. The core figure was +0.2% against a forecast of +0.3%. In annual terms, PCE was 3.4% against expectations of 3.7%. After these data, the market lowered its estimate of the probability of a Fed rate hike in October from about 51% to 38%.
What's next
Swiss inflation data is released today. On Friday, the market will get NFP, the US employment report. The consensus expects job growth of 90 thousand and unemployment at 4.1%. Two reports in a row could either confirm the current seven-day USD/CHF trend or become its first serious test.
Seven days of trend passed you by?
Such a prolonged trend in a currency pair does not happen every day. But before buying a challenge, it is important to check the terms of the specific prop program: which currency pairs are available, what spreads and swaps apply when holding a position, and whether trading is allowed during the release of inflation and employment data. In some programs, this trading style is allowed; in others, restrictions apply. It is better to check this before buying a challenge, not after violating the account terms.