Early this morning the Swiss National Bank said the CHF is “massively overvalued at present,” and began flooding the market with liquidity to get the 3-month Libor rate as close to zero as possible. The CHF weakened sharply versus both the USD and the EUR. Yesterday the agreement to raise the debt ceiling was met by markets with a fall out in global equities with the major bourses down over 2% and the safe-haven currencies JPY and USD bid.
Today’s Key Economic Events:
GBP – Services PMI – 08:30 GMT
Expectations: 53.3. Previous: 53.9.
Monday’s manufacturing PMI was below the 50 boom/bust level while yesterday’s construction PMI fared slightly better. A weak reading today will likely have the GBP/USD testing the 1.6260 support level with scope towards 1.6210 at the 38% retracement from the mid to late July move. Resistance comes in at 1.6325.
USD – ADP Non-Farm Employment Change – 12:15 GMT
Expectations: 101K. Previous: 157K.
Last month the ADP report came in above market expectations and caused economists to up their forecasts for Friday’s non-farm jobs report, only to have the jobs report grossly underperform market expectations. Traders should be wary of using the ADP report as a proxy for Friday’s headline jobs report. However, today’s ADP numbers if stronger would likely increase market sentiment and help the recovery in equities and higher yielding assets. EUR/USD initial resistance comes in at 1.4280 followed by 1.4450. Support is found at 1.4125. EUR/CHF resistance is located at 1.1200 followed by 1.1400.
Read more forex trading news on our forex blog.