USD/CHF advances towards 0.9500 as China’s anti-lockdown protests trigger risk-off profile

The USD/CHF pair has attempted a recovery after dropping to near the crucial support of 0.9440 in the early Asian session. The attempted recovery seems to have some wings as rising protests from individuals against anti-Covid locking measures have triggered the risk aversion theme in the global market.

The asset has advanced near 0.9480, at the time of writing, and is expected to remain in the grip of bulls as the US Dollar index (DXY) is showing some strength. The USD Index has accelerated to near 106.23 and is aiming to test a two-day high at 106.42. Road protests toward Covid-19 curbs by households in China have triggered a risk of a severe decline in economic prospects, which has improved the appeal for safe-haven assets.

The 10-year US Treasury yields are still below 3.70% as the Federal Reserve (Fed) is looking to halt the bigger rate hike culture to reduce financial risks and to observe the progress made by efforts from Fed policymakers till now.

Going forward, the preliminary United States Gross Domestic Product (GDP) data will be crucial for further guidance. The economic data for the third quarter is seen as stable at 2.6%. This might keep reins in the US Dollar but won’t Fed chair Jerome Powell in his mission of achieving price stability. Sustainability in growth rates despite strict policy measures indicates that retail demand is robust, which won’t let inflation come down as required.

On the Swiss franc front, investors are also awaiting Tuesday’s GDP data. On a quarterly basis, the economic data is seen unchanged at 0.3%. While, on an annual basis, the growth rates are expected to decline to 1.0% vs. the prior release of 2.8%.