A1 Trading Company

September 21, 2023

GBP, USD and CHF Post Rate Decision

Frank Cabibi

The SNB, BoE, and Fed decided to keep rates unchanged at 1.75%, 5.25% and 5.25% respectively. In the ongoing battle for lower inflation, central banks are dedicated to reaching their targets. But at what cost to the economy?

EdgeFinder Analysis

USDCHF is a top bullish reading on the EdgeFinder. Retail has actually been long this pair for some time, so for the first time in a while, they have been correct. Unemployment is also under better circumstances in Switzerland. These two categories have kept the score from moving to a +9.

The SNB and Fed decided to keep rates the same. This is less concerning to CHF because their inflation numbers are actually complying with higher interest. The US however, is experiencing higher CPI with unchanged rates, suggesting that the Fed will either keep rates higher for longer, or bump another 25 bp in the next meeting.

The NASDAQ broke under a strong level of support on the 1D timeframe and is now testing a backup support level around $14,800. Since price hasn't bounced from the lows, we will have to wait for confirmation before considering any rally in the tech market.

If price breaks below this level, there is additional support around $14,550. The break and close underneath the rising trend line is a bearish sign for indices right now, and a growing expectation of further rate hikes could be putting pressure on these markets for a while.

GBPUSD is the strongest bearish reading on the EdgeFinder. At -10, the Euro is swept by the dollar in every category. Technicals are pointing lower, COT is selling euro and buying dollar. This month is historically the worst month for GU as well.

The BoE also maintained rates at 5.25% like the US, but the UK is also in a worse economic position. Inflation is still incredibly high in the UK, especially for the bank rate being on par with the US. For the time being, the pound is not looking strong in any pair either.

Retail Spotlight

Retail is growing a risk-appetite for AUD, NZD and GBP. UJ and USDCAD are now leaning more to the short side of the trade.

Smart Money Tracker

GBPUSD is steadily declining on the net positioning bias. As GBP's contracts are being sold, USD is seeing growth in investor speculation.

Fundamental Spotlight

Latest inflation data shows that the US seems to be the only country struggling with creeping rates. The pound's rate is the highest overall, and CHF is in compliance with interest.

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