The USD was unable to resist the typical "buy the myth, sell the fact" trade, pushing EUR/USD to 1.1800. However, despite the lack of any signal, Powell did confirm that it might be appropriate to taper this fiscal year. This will depend on key data releases next week, including the jobs report. An identical figure to the previous two reports (850k and 943k respectively) will give the green light that significant progress has been made on the jobs front, which should limit the negative impact on the greenback. While German data will be on the docket next week, tier 1 US data will take precedence with ISM prints and the aforementioned NFP report. Despite the release of German CPI next week, it's worth noting that the latest ECB minutes indicated that there were upside risks to the Bank’s inflation forecasts.
EUR/CHF CARVING AWAY A BOTTOM
EUR/CHF: The cross working on a short-term bottom at 1.0700, having posted its strongest weekly advance since mid-June. Given the recent increase in sight deposits, which are typically used to signal SNB FX intervention, the handle at 1.0700 appears to be the SNB's softline in the sand. To extend the move to the upside by the cross, it will need to move higher in yields. The strategy is bullish for dips below 1.0700.