USD/CHF attracts some buyers below the 0.9000 barrier, Fed’s Powell speech, Swiss trade data eyed

The USD/CHF pair posts modest gains below the 0.9000 psychological mark during the Asian session on Thursday. The recovery of the pair is supported by a rise in US Treasury yields and a firmer US Dollar (USD). Meanwhile, the US Dollar Index (DXY) surges to 106.63. US Treasury yields edge higher, with the 10-year Treasury yield climbing to 4.965%, the highest level since 2007, and the 2-year Treasury yield staying at 5.251%.

On Wednesday, Federal Reserve (Fed) officials reaffirmed their stance to maintain interest rates at their current level. The Fed Governor Christopher Waller stated that it's too early to tell if more policy rate action is needed while adding that the central bank can make the decision on policy path depending on the data. While Fed Bank of New York John Williams said the central bank needs restrictive monetary policy for a while to cool inflation. These comments lift the US bond yields higher amid robust momentum in US growth.

The US Building Permits fell to 1.475M in September, above the estimated of 1.45M, while Housing Starts rose to 1.35M, below the market consensus of 1.38M, data published by the US Census Bureau showed Wednesday. Additionally, the Fed Beige Book update showed the US economic outlook had "little to no change" between September and early October and the data might not convince the FOMC to abandon its current guidance.

On the Swiss Franc front, the rising geopolitical tension in the Middle East could boost the demand for a traditional safe-haven asset such as Swiss Franc (CHF). On Tuesday, Gaza authorities said an Israeli air attack killed 500 people at a hospital in the Palestinian territory, while Israel stated the damage was caused by a Palestinian attack. US President Joe Biden has reached an agreement with Egypt to provide limited aid to Gaza in order to alleviate a humanitarian catastrophe caused by the Israel-Hamas conflict.

Last week, the Swiss Producer and Import Prices fell 1.0% YoY in September from the previous reading of a 0.8% drop. On a monthly basis, the figures dropped 0.1% versus a 0.8% drop prior.

Traders will monitor the US Jobless Claims, the Philly Fed index, and Existing Home Sales due later on Thursday. All eyes will focus on the Fed Chair Jerome Powell’s speech in the North American session. If Powell delivers hawkish comments on the policy outlook, the US Dollar might attract buyers. Also, the Swiss trade data for September will be released on Thursday. These events could give a clear direction to the USD/CHF pair.