The US dollar continues to see strength against the lowly Swiss franc on Wednesday, as we are looking at this through the prism of the carry trade at the moment.
The U.S. dollar initially fell during the trading session on Wednesday against the Swiss franc, only to turn around and show signs of life. This is a strong sign, despite the fact that there were a few numbers on Wednesday that should have been dollar-negative.
Ultimately, this is a market that has been very bullish for a while, and it does make quite a bit of sense that we continue to go higher. I think we go looking toward the 0.84 level, but that does not mean that it has to happen today.
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The interest rate differential is huge and only getting wider
Despite the fact that we got cooler-than-anticipated Core PCE Price Index numbers during the trading session on Wednesday out of the United States, traders are likely to continue to see a little bit of questions about the October interest rate hike, but we are still pricing in one in December. So, really, not much has changed.
We also have to worry about energy inflation, and that is a major factor in the United States. All things being equal, the 0.82 level is an area that I believe is significant resistance, so it should be significant support. As long as we stay above there, I am really bullish in this pair.
You get paid at the end of every day, and I have been holding onto this for some time. The Swiss National Bank has no interest whatsoever in trying to raise rates. In fact, they will keep them as close to zero as possible.
This is a nice impulsive move. Any type of drop at this point in time, for me, looks like value to add to an existing position that I already had.
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