The rates continue within a downward trend. At the same time, the price correction observed in June has strongly shifted the resistance line up and has created the preconditions for a trend reversal. This was made possible by the rapid growth of oil prices, as well as the best in comparison with the Swiss economy, the economic situation in Canada. In addition, the CAD is somewhat distant as a commodity currency from the trade conflict between China and the United States and receives support with the rise in oil prices, which are not always dependent on China's economy.
This week oil retreated from the previously achieved level of $60, following the G20 summit and the uncertainty around the trade conflict between China and the United States. In addition, oil reserves in the US declined less than expected this week. It should be noted that all the short-term factors supporting oil remain in the past: the agreement to reduce oil production has been extended, while the likelihood of a military conflict between Iran and the United States remains, but decreases. New growth incentives will be needed.
The Canadian dollar can still count on support with the publication of macroeconomic reports. The latest data shows Canada's GDP growth at a higher rate than expected and business activity, which has been declining for the last 7 consecutive months, finally consolidated at the level of 49.2 pips in June, although it remains at its lowest in 4 years. This week data on the trade balance and unemployment rate is expected and can be positive.
The Swiss franc is under pressure due to the economic downturn in the EU and in Switzerland itself. Business activity is rapidly decreasing and is already below 50 pips. The index of business sentiment is in the negative zone and in June it was -30 pips against -14 just a month earlier. Another negative factor for the franc is the probability of the US imposing trade duties on the EU, which will have a negative impact on the economic growth of the region. Therefore, the franc is the least attractive among all safety assets.
At the moment we can see a consolidation of the rates in the narrow range of 0.7507 - 0.7531 CHF. Both currencies are weak and need new incentives. However, we suppose that the most preferred in the short term will be the deals to SELL in favor of the CHF, as also confirmed by the Stochastic oscillator.
