Markets Reacted Negative to Rate Hikes, Franc and Dollar Shone

Action Insight Weekly Report 6-18-22

Markets Reacted Negative to Rate Hikes, Franc and Dollar Shone

Net reactions of the global markets to Fed's 75bps rate hike were rather negative. Global stocks ended generally lower after initial recovery. Additionally, SNB delivered a surprised 50bps rate hike while BoE's 25bps had a hawkish undertone with three members wanted more. BoJ stayed calm and kept interest rate unchanged while maintaining the 10-year JGB yield cap at 0.25%.

In the currency markets, Swiss Franc was overwhelmingly the strongest one. Dollar followed as second but there was clearly some hesitation towards the end, in particular against Euro. Canadian Dollar was the worst as dragged down additionally by falling oil prices. Australian Dollar was also weighed down by overall risk averse sentiment.

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EUR/CHF Weekly Outlook

EUR/CHF's sharp decline last week and break of 1.0216 support suggests that corrective rebound from 0.9970 has completed after failing 1.0505 long term resistance, as well as 55 week EMA. Initial bias stays on the downside this week. Break of 1.0086 support will affirm this bearish case and bring retest of 0.9970 low. On the upside, above 1.0232 minor resistance will turn intraday bias neutral first. But risk will stay on the downside as long as 1.0513 resistance holds.

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