The U.S. dollar rallied a bit in the early part of the Friday session, as we continue to see interest rates move the markets overall.
USD/CHF
The U.S. dollar has rallied quite nicely against the Swiss franc, and that does not surprise me considering the interest rate differential.
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The Swiss National Bank continues to hang on to a zero-interest-rate policy, while the Federal Reserve is likely to raise rates, not at this meeting but the one in December. At least, that is what the market expects. You get paid to hang on to this pair, and that has been the case for some time.
The Swiss are nowhere near raising rates. The Federal Reserve almost certainly will have to, sooner or later, and therefore it leads to higher pricing. Unless there is a huge run to the Swiss franc for safety, this is a market that I am willing to look at in one direction, and that is only buying.
Moving averages
The 50-day EMA is an indicator that a lot of people will be watching for support. The 0.83 level has recently been a bit of a magnet for price, and if we were to break above there, then the market could go looking to the 0.84 level. If we can turn around and break above there, then the 0.85 level is the next psychologically important number that we go looking to.
I have no interest whatsoever in shorting this pair, but if we did fall, we could go looking to the 200-day EMA just below the 0.81 level. Ultimately, we have been in a nice uptrend since January.
I got involved in this several months ago, got out, and now have been back in for a few weeks, just adding to a position as the markets start to move in and out of my favor. I do like the idea of building up a larger carry trade here, and I do think that one of the problems Switzerland will face this winter could be an energy shortage problem.
The United States is starting to pull diplomats out of Saudi Arabia, and that could very well mean more hostilities with the Iranians, with the Iranians, of course, reacting as they have in the past. That could starve the European Union of energy, as well as Switzerland, which obviously is landlocked.
So, all of that being said, I am bullish, I remain bullish, and I do think we eventually see this carry trade position play out.
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