"The sharp fall in USDCHF over the past 24 hours has encouraged us to take profit on our USDCHF put spread recommendation from last week for a 1.7% gain. We recommended the trade noting a rapid increase in USD long positioning and pricing for a Fed December hike.

The USD correction could have further to run but risk reward favours covering this trade at this time. Increased pre-election financial market volatility has led rates markets to pare back pricing for a December rate hike, even as the manufacturing ISM improved in line with expectations. We have been wary heading into a period of elevated data, Fed and election-related uncertainty.

Ahead today, we expect the statement following the FOMC meeting to continue to steer markets towards pricing a December rate hike. However, with a hike in December still nearly 70% priced in, we would not expect cautious and data-contingent Fed guidance to push rate differentials much further in the dollar's favour. We look for the USD to make a more durable recovery later in November as election uncertainty passes and data continues to signal scope for renewed tightening".

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