- USD/CHF prints three-day downtrend as sellers flirt with 18-month low.
- Fed drowned US Dollar with dovish hike, downbeat US data also favor USD/CHF bears.
- Monetary policy decision from ECB, BoE could escalate market volatility, making them important to watch.
- US jobs report eyed as Fed Chair Powell showed readiness to cut the rates.
USD/CHF remains depressed at the lowest levels since August 2021 as bears cheer a three-day downtrend near 0.9065 during Thursday’s Asian session. In doing so, the Swiss Franc (CHF) pair extends the US Federal Reserve-induced losses as market players await the key central bank decision and the US employment report for January.
USD/CHF refreshed a multi-day low the previous day as downbeat US data joined the Fed’s dovish rate hike.
That said, the Fed matched market forecasts of increasing the benchmark rate by 0.25% but the Monetary Policy Statement weighed on the US Dollar while saying that the inflation “has eased somewhat but remains elevated”.
Adding strength to the USD weakness were comments from Fed Chair Jerome Powell as he said “We can declare that a deflationary process has begun.” The policymaker also accepts the need for rate cuts during late 2023 if inflation comes down much faster. Even so, Fed’s Powell suggested that a couple more rate hikes are needed to reach it.
Elsewhere, US ISM Manufacturing PMI dropped to the lowest levels since June 2020 while marking 47.4 figure for January, versus 48.0 expected and 48.4 prior. Further, the ADP Employment Change also declined to a one-year low with 106K the latest figure compared to the 178K market forecasts and the upwardly revised previous figure of 253K. On the contrary, JOLTS Job Openings rose to 11.012M in December, crossing 10.25M consensus and 10.44M prior readings.
Against this backdrop, Wall Street rallied and the US 10-year Treasury yields slumped the most in two weeks. It should be observed that the benchmark yields lick their wounds near 3.41% while the S&P 500 Futures print mild gains by the press time.
Looking forward, USD/CHF traders should pay attention to the market moves affected by the monetary policy meetings of the European Central Bank (ECB) and the Bank of England (BoE). However, major attention should be given to Friday’s US Jobs report. Among them, the headlines Nonfarm Payrolls (NFP), expected to ease to 185K versus 223K prior, will be important to watch.
Technical analysis
A daily closing below the horizontal support zone established since late October 2021, now a resistance line around 0.9085-90, keeps USD/CHF bears directed towards April 2021 bottom surrounding 0.9020.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds gains above 1.0700, as key US data loom
EUR/USD holds gains above 1.0700 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
GBP/USD extends recovery above 1.2500, awaits US GDP data
GBP/USD is catching a fresh bid wave, rising above 1.2500 in European trading on Thursday. The US Dollar resumes its corrective downside, as traders resort to repositioning ahead of the high-impact US advance GDP data for the first quarter.
Gold price edges higher amid weaker USD and softer risk tone, focus remains on US GDP
Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.