Wednesday 19 August was the week, and the trigger was not the one the calendar advertised. The July FOMC minutes landed hawkish — minutes confirmed that some members see the case for higher rates — yet the dollar fell anyway, with the dollar index dropping sharply after the US Treasury announced larger debt buybacks aimed at containing borrowing costs and the index holding just above the three-month low it set near 98.50 on Thursday; that flipped our long USD/CHF from onside to offside in a single session. The same flows bid the franc as a haven for the first time this cycle — rallies in gold and silver alongside the Swiss franc on increased haven flows — and all six of our franc longs posted their worst session of the window simultaneously, with SGD/CHF, GBP/CHF, EUR/CHF, AUD/CHF and CAD/CHF all hit on the same day. Australia delivered the cleanest thesis damage: July jobs fell 15,800 against consensus for a gain, pushing unemployment up to 4.5% versus 4.4% expected, which strips the rate-path leg out of long AUD/CHF and, awkwardly, did not stop GBP/AUD falling our way. Energy was the one clean positive — higher oil prices as the US prepares sweeping new sanctions against Iran — good for CAD/CHF's terms-of-trade leg, bad for the franc-funding premise underneath the rest of the complex.
How our views are tracking
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Long SGD/CHF — thesis unchanged Neither the SNB nor MAS had a policy event, so the entire round trip was franc beta rather than anything structural — but gold's advance beyond the level our risk dashboard named as a conviction-reducer for this trade means the exposure is now more expensive than we underwrote. |
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Long CAD/CHF — thesis strengthened A second consecutive weekly gain in crude on the Iran sanctions headline restored the terms-of-trade leg to its strongest reading of the cycle, though the Section 338 tariff finally taking effect on 22 August lands entirely unpriced in Monday's open. |
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Long AUD/CHF — thesis weakened The RBA's conditioning clause survived, but the labour data removed the market-implied tightening path that clause was supposed to deliver, converting the trade from a rate-path position into a pure carry-and-beta one. |
Invalidator watch
Four conditions moved from Clear to Watch this week and none improved: USD/CHF's 200-day cushion halved and is now the tightest in the book, CHF/JPY's 100-day test closed sharply, and AUD/CHF's short-horizon realised volatility is running above its threshold even though the 60-day measure has not yet crossed. The yen-positioning invalidator on our CHF/JPY short remains triggered for a third consecutive week — that block requires formal reassessment at the next full cycle, not a fresh recommendation here — while the franc longs remain technically valid but should now be managed as one correlated position rather than six independent ones.
Next week
| Tue Aug 25 | RBA August minutes | Affects: AUD/CHF, GBP/AUD |
| Wed Aug 26 | Australia July CPI; Singapore inflation | Affects: AUD/CHF, SGD/CHF, GBP/AUD |
| Wed Aug 26 | US PCE | Affects: USD/CHF, NZD/USD |
| Thu–Sat Aug 27–29 | Jackson Hole — Warsh keynote | Affects: USD/CHF, NZD/USD, all USD |
| Fri Aug 28 | Payrolls benchmark revision; Tokyo CPI; Canada Q2 GDP | Affects: USD/CHF, CHF/JPY, CAD/CHF |
Warsh's keynote is the one that matters: the rates market finished last week pricing only 9bp of hikes for September, neutrality is fully in the price, and USD/CHF has the least room to its downside case of anything in our book — both a hawkish and an evasive frame hurt it, for opposite reasons.
Full analysis with all pair rankings, carry landscape, risk dashboard, and catalyst calendar available for Edge and Dossier members.