USD/CHF looks to extend losses below 0.8980 amid softer USD, Swiss CPI eyed
|- USD/CHF continues to trade lower in the Asian session.
- US 10-year bond yields weigh on the demand for the US dollar.
- Swiss Franc gains on its safe haven appeal.
The depreciation in the US dollar keeps USD/CHF edgy on Monday morning in the Asian session. The pair is moving in a narrow trade band of 0.8950-0.9000 for the past three weeks.
At the time of writing, the USD/CHF pair is trading at 0.8989, down 0.4% for the day.
The US dollar trades little changed on Monday after a steep decline on Friday from the high of 90.60 to touch the lower level near 90.01. The move in the US dollar came as investors weighed weaker than expected economic data as it poured water on the prospects of rising interest rates.
The US economy added 559K jobs in May, below the market consensus at 650K. The Factory orders contracted 0.6% in April, the first decline in the previous 12 months, against the market expectations of a 0.2% fall.
The softer than expected data was assessed by the market participants as a weaker argument against the rate hike bet, and there is no urgency for the Fed to begin tapering its monthly purchase of $120 billion bonds. This, in turn, turns investors away from the greenback.
Meanwhile, the US Treasury Secretary Janet Yellen on the weekend said that US President Joe Biden’s $4 trillion spending plan would be good for the US economy, even if it contributes to rising inflation and results in higher interest rates. These comments provide some lower grounds to the US dollar.
On the other hand, the Swiss Franc maintains its safe-haven appeal. The currency is always affected by the forex intervention tool as being quoted by the Swiss National Bank, Vice Chairman Fritz Zurbruegg. The policymakers remain concerned about the reduced demand for safer assets as the global economic outlook improves.
The Swiss central bank said on Tuesday, “inflation is still very low in the country and Gross Domestic Product (GDP) is not yet at pre-pandemic stimulus.” This favors the SNB’s ultra expansive monetary policy.
As for now, traders are looking for the release of Swiss Unemployment data and CPI figures to take the clue of market sentiment.
USD/CHF Additional Levels
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