The EURCHF stumbled lower on the overall EUR selling and in the process moved to the lowest level since July 14. The low price reached 1.06756. That was just above the 200 day moving average at 1.06736.

Buyers lean against the moving average level and have pushed the price back up toward the 1.0700 level. The current price is trading at 1.0690.

Drilling to the hourly chart below, the price yesterday moved above its 100 day moving average at 1.07373, but stalled near a swing area between 1.07457 and 1.07481 (see red numbered circles).

The move back below the 100 day moving average, turned buyers to sellers. The price settled near the 100 and 200 hour moving averages near the end of day.

Today, after a initial moved to the downside in the Asian session, the price corrected up to retest the 100 and 200 hour moving averages. Sellers leaned against level and push the price back down in the European session. The run made to just short of the 200 day moving average.

So buyers leaned at support and that supported so far held. If the price is to head back higher, reward the dip buyers, and tilt the bias more to the upside getting back above the low from last Friday near the 1.0701 level, and the earlier swing low today would be eyed. Failure to get above that level and the sellers may make another run toward its 200 day moving average.

Justin broke the news yesterday of the PBOC asking banks to suspend the use of the counter-cyclical factor in its daily yuan midpoint fixing.

Check out the chart below for the extent of yuan gains since May, if these keep on China’s export performance will suffer. I think its well worth paying attention to this story and we are about to see greater two-way movement of the yuan ahead. Recall also the PBOC moved in early October to make selling yuan forward cheaper. This new development builds on that. (PBOC has lowered the reserve requirements on some forward yuan FX trading.)

• EUR long 166K vs 168K long last week. Longs trimmed by 2K
• GBP short 2K vs 10K short last week. Shorts trimmed by 8K
• JPY long 14K vs 20K long last week. Longs trimmed by 6K
• CHF long 14K vs 12K long last week. Longs increased by 2K
• AUD long 7K vs 4K long last week. Longs increased by 3K
• NZD long 6K vs 6K long last week. No change this week
• CAD short 19k vs 14K short last week. Shorts increased by 5K
• Prior report

The GBP shorts were wise to get out of the way ahead of Wednesday’s news on restarting negotiations. The nearly-flat positioning now reflects the total lack of commitment in the trade lately.

Canadian dollar shorts had been paring bets for a few weeks but they’re getting back short again. I’d love to know the thinking on that trade from anyone who is in it.

The New Zealand dollar is the top performer this week while the US dollar was the laggard. Even today with USD staging a bit of a comeback, it’s not sticking as the kiwi pushes back into positive territory.

The break above the October highs is constructive for a retest of 0.6800 in the short term but over all the kiwi is right in the middle of the range it’s carved out since June.

Sterling had been atop the FX leaderboard this week but the enthusiasm about Brexit negotiations has quickly faded. I think the news and prognosis are better than ever but sterling traders have been burned by headlines too many times. GBP is going to be a rare ‘buy the fact’ trade if/when a deal is finally in reach.