USD/CHF recovers towards 0.97 after quick drop on US GDP

After dropping to 0.9646 with the initial reaction to the macro data from the U.S. and turning flat on the day, the USD/CHF started to recover its losses and is now trading at 0.9702, up 0.58%, or 55 pips, on the day.

Today's data released by the Bureau of Economic Analysis showed that the preliminary GDP growth in the U.S. for the second quarter of 2017 improved to 2.6% from 1.2% in the first quarter, but the greenback encountered a fresh selling wave in the early NA session. The fact that a robust GDP reading today had already been priced after yesterday's durable goods orders and trade balance data failed to provide an additional boost to the USD. Moreover, further details of the report showed that the personal consumption expenditure prices in Q2 eased to 0.3% in Q2 from 2.2% in Q1, suggesting that soft inflation is likely to force the FOMC to refrain from accelerating its tightening pace.

• US: Real GDP increased at an annual rate of 2.6% in second quarter of 2017
• US: PCE price index increased 0.3 percent in second quarter

At the top of the hour, University of Michigan will release its preliminary Consumer Sentiment Index data for July, which is expected to stay unchanged at 93.1. Later in the session, FOMC voting member and Minneapolis Fed President Neel Kashkari's speech will be looked upon for fresh impetus. 

Technical outlook

On the upside, 0.9700 (psychological level/Jul. 14 high) could be seen as the initial resistance ahead of 0.9740 (Jun. 26 high) and 0.9780 (100-DMA). On the downside, supports are located at 0.9635 (daily low), 0.9590 (Jul. 17 low) and 0.9490 (Jul. 26 low).