Westpac analysts see upside in USD/CHF trades
Westpac reiterated a recommendation to buy USD/CHF in its weekly 'high conviction trades' report. They bought the pair at 0.9700 (spot at 0.9774) with a stop at 0.9600 and undefined profit target.
USDCHF daily
Westpac previously recommended USD/CAD longs with a target at 1.35 and still like the trade but were stopped out at 1.2983 for a 6% return.
On the Swiss franc macroeconomic background they note that gains in EUR/CHF have slowed ahead of 1.10 (1.0962 the high). "USD/CHF should continue to edge higher with SNB managing to massage CHF lower and reduced Greek tail risks another supportive factor."
Technically, they note that the two month uptrend structure remains in play "but has stumbled at key resistance above 0.9850 last week. short term momentum stress implies a pause in the coming weeks."
On the US dollar, they say "the Fed is likely to continue to forecast a return in core inflation to their 2% medium term objective given the ongoing steady healing in the labour market. As such Sep Fed lift-off remains in play."
