USD/CHF Hovers At 1 Year Highs, GBP Rises On “No” Expectation,

The dollar was trading more or less sideways ahead of today’s big risk event which is the Federal Reserve meeting. The statement, accompanying material and projections and Yellen’s press conference will be closely scrutinized. Investors appear divided as to what changes to expect – particularly in the statement. For example, there is a lot of debate on whether the Fed will maintain its pledge to keep interest rates low for a “considerable” period. According to a well-informed reporter of the Wall Street Journal, the phrase “considerable” will likely stay in the statement and this caused some dollar selling.

Overall, one should expect a significant reaction to what the Fed says, but quite possibly investors may also be looking to buy the dollar on dips; such is the bullish sentiment towards the greenback. Therefore there is the scenario that even if the Fed delays its language change for now, time will still be on the side of US dollar bulls – as long as economic data out of the United States continues to come out relatively upbeat.

The Australian dollar was trading relatively strong – relative to its recent sub-90 cent weakness anyway – at 0.9067. The aussie was boosted by the profit-taking in the dollar and the powerful risk rally that took place in Wall Street overnight. It was also hurt by news that the People’s Bank of China (PBOC) would inject 500 billion yuan’s (around 81 billion dollars) worth of liquidity into the country’s 5 biggest banks. Therefore it is already evident that Chinese authorities are taking action to prevent an economic slowdown and boost the country’s financial system.

Finally, the pound was also up on growing hopes that the Scottish independence referendum would return a “No” vote. The three latest polls showed a 52-48 percent lead in favor of “No”. Still it was too close to call as there was still a significant portion (8 to 14%) of voters that remained undecided. The pound traded at 1.6275 against the dollar. Minutes from the September Bank of England meeting will also be released today.

Other important economic statistics today include the eurozone final and US inflation numbers.

USD/CHF hovers at 1-year high

USD/CHF is hovering near 1-year highs and currently pivoting around 0.9343, which is the 61.8% Fibonacci retracement of the 0.9749 – 0.8698 downleg.

The short-term technical structure is positive – tenkan-sen and kijun-sen are positively aligned and momentum oscillators are in bullish territory (RSI and MACD).

A break of the September 10 high of 0.9394 will accelerate a move towards the September 5 high of 0.9454.

Near-term support is seen at 0.9286 (September 5 low).