Friday was the week. Fed Chair Warsh used his Jackson Hole keynote to say the Fed still has work to do on inflation, and the front end repriced hard — the dollar index firmed to roughly 99.7, its best level since the 21 August three-month low, as short-dated Treasury yields surged and September hike odds swung from roughly a third to better than a coin flip. That single repricing flipped our long USD/CHF from offside to profit, drove USD/JPY to the highest close of our window, and — via a 4%+ slide in gold — dismantled the haven bid that had been squeezing every franc-funded long in the book. Tuesday's Australian July CPI did the other half of the work: headline fell only to 3.5% rather than the 3.3% expected, reviving RBA hike pricing and lifting the Aussie across the board, which paid our long AUD/CHF and pushed short GBP/AUD through its tactical objective. Meanwhile Brent slid over 5% on the week as the Iran standoff was reframed as a sanctions problem rather than a supply problem, and Canada confirmed counter-tariffs on US goods due to start 8 September — both directly relevant to our long CAD/CHF.
How our views are tracking
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Long SGD/CHF — thesis strengthened Singapore's July core print came in under forecast but still widened the bilateral inflation gap against a 0.4% Swiss headline, and with gold reversing sharply the franc-squeeze channel we flagged last week has closed — the position is back at its recovery high. |
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Long CAD/CHF — thesis weakened The 50% US tariff took effect and the cross barely blinked, which resolves the risk we flagged a week ago, but Brent's first weekly decline of the cycle removes the terms-of-trade support the strategic case leans on — and Canadian retaliation lands 8 September into a position no longer cushioned by oil. |
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Long AUD/CHF — thesis strengthened The hotter-than-expected Australian CPI and minutes showing the board actively debated a hike restored the rate-path leg we had written off eight days ago, taking the trade to the highest close of the window on four consecutive up sessions. |
Invalidator watch
Five conditions moved back to clear this week — the RBA tightening-clause and volatility tests behind AUD/CHF, the long-end yield test behind USD/CHF, and the BoE-versus-RBA test behind short GBP/AUD — and the yen-positioning invalidator on our CHF/JPY short remains triggered for a fourth week, so that position is held pending formal reassessment rather than re-recommended. The one genuinely adverse move is CAD/CHF's oil condition: Brent is still far from the trigger level, but this is the first review in four where the direction of travel on that invalidator has gone against us, and we would take partial profit rather than defend it into next week's Bank of Canada decision.
Next week
| Tue Sep 1 | Swiss August CPI | Affects: GBP/CHF, EUR/CHF, SGD/CHF |
| Tue Sep 1 | Euro area flash HICP | Affects: EUR/CHF, EUR/GBP |
| Wed Sep 2 | Bank of Canada decision | Affects: CAD/CHF, GBP/CAD |
| Wed Sep 2 | RBNZ Monetary Policy Statement | Affects: NZD/USD, NZD/JPY |
| Fri Sep 4 | US August employment report | Affects: USD/CHF, USD/JPY, EUR/USD |
Friday's payrolls is the one that matters: after Warsh's remarks and a benchmark revision that read better than feared, the labour market is now the only leg of the September hike case still soft — a firm print entrenches the front-end repricing our USD/CHF and franc-funded longs depend on, a weak one unwinds it in a session.
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