The USD/CHF currency pair experienced difficulties in maintaining its recent gains during the Asian session on Friday, trading with a slight downward bias. Currently, spot prices hover around the 0.8660-0.8655 range, amid a modest decline in the US Dollar (USD). Despite the recent strong performance, the pair shows limited bearish momentum or conviction.
Expectations for a potential 50 basis point interest rate cut by the Federal Reserve (Fed) in September have contributed to a drop in US Treasury bond yields. This decline has pressured the USD Index (DXY), which measures the Greenback against a basket of currencies, pulling it back from the weekly highs reached on Thursday and impacting the USD/CHF pair. Conversely, the broader risk-on sentiment is diminishing demand for the safe-haven Swiss Franc (CHF), providing some support for the USD/CHF pair.
Additionally, better-than-expected US Initial Jobless Claims data released on Thursday alleviated recession fears for the US economy. Chinese data released on Friday also showed a rise in the headline consumer price index (CPI) to a five-month high of 0.5% year-on-year in July. This increase may signal a rebound in domestic demand, further boosting investor confidence, as reflected in the generally positive tone across global equity markets.
With no significant economic releases scheduled for Friday, the mixed fundamental backdrop suggests caution before making any significant intraday trading decisions. Market participants are now awaiting the latest US consumer inflation figures, set to be released next Wednesday. These figures are expected to play a crucial role in shaping the Fed’s future policy decisions, which will likely impact both the USD and the USD/CHF pair.
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