After last week’s ‘second wave’ risks, central banks have been quick to step in to shore up possible economic ramifications. Banks around the world used either strong policy action, language, or a combination of both.
Swiss National Bank left rates in check with a negative interest rate of -0.75%, its reasonings were inflation remained depressed and growth prospects are declining over their forecasted period. It also mentioned that it would intervene if the strength in the CHF continued. That ‘true’ safe-haven characteristic of the CHF is hurting the Swiss economy.
The Federal Reserve also acted on the sign of fragility stating it was going to step in and buy individual corporate bonds. It must be nice having the State’s bank there to bank role your liabilities. US risk assets (equities) took this as a big positive, but in FX land is was met with a little more caution. USD was flat against the JPY but rose against all other G10 currencies, would have expected EUR/USD and AUD/USD to back this but they didn’t.
Which, continues the trend in DXY, since it technically rejected 100 then became double blessed with fundamentals – a scenario that’s still intact. Traders remain long USD due to the overbought nature of EUR/USD and AUD/USD and no real fundamental reasoning in other pairs to put pressure on traders to exit newly entered long positions in the USD.
USD/CHF LONG (Buy)
ENTER AT: 0.949