USD/CHF: Dollar jumped on higher US Treasury yields ahead of auctions


  • USD surged on higher US bond yields ahead of this week’s $437 billion US Treasury auctions.
  • USD was also helped by Japanese jawboning.

The USD/CHF is now trading around 0.9540, jumped by almost 0.75% in New York session on a broader recovery in dollar amid higher US bond yields ahead of a deluge of US Treasury auctions later in the day. The benchmark 10-year US Treasury yield moved to 2.93% as the US government bond prices are under pressure on supply concerns as the US Treasury gets ready to auction $151 billion of short-term Treasury bills and $28 billion of 2-year Treasury notes on Tuesday ahead of this week’s “monster issuance” of another $258 billion worth of the US Treasury securities.

It seems that the yield-hungry market is viewing yields on 2-year Treasuries as a buying opportunity in an environment of negative short-term yields on Japanese and German notes.

After last week’s light Japanese jawboning, US Dollar was further boosted on Tuesday when Japanese Finance Minister  Taro Aso reiterated that BOJ has to continue working with the government to achieve the 2% inflation target, although the country may have more or less escaped from an economic depression.

The Swiss franc is under pressure on risk-on rally similarly to the gold and Japanese Yen which are regarded as safe haven assets. Any fresh geopolitical worries such as Muller’s ongoing investigation about Russia and Trump could also boost the CHF in the days ahead on risk-aversion narrative.

Technically, USD/CHF now has to sustain above 0.9435 area for a further rally, else sustaining below 0.9415-0.9395, it may again come down.
 

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