USD/CHF extends four-day uptrend towards 0.9300 amid broad US Dollar strength

USD/CHF pleases bulls around 0.9280-85 as it rises for the fourth consecutive day during early Friday. In doing so, the Swiss Franc (CHF) pair follows the general US Dollar strength amid a light calendar ahead of the fourth quarter (Q4) Industrial Production for Switzerland.

Be it strong US data or the geopolitical risks emanating from China, not to forget hawkish Fed talks and strong US Treasury bond yields, the US Dollar has it all to justify the latest rise. That said, the US Dollar Index (DXY) takes the bids to refresh a six-week high near 104.30 at the latest.

Starting with the US data, Producer Price Index (PPI) for January gained major attention as it jumped the most since June with 0.7% MoM figure. Also positive for the pair was the improvement in the US Initial Jobless Claims for the week ended on February 10, 194K versus 200K expected and 195K prior. On the contrary, a slump in the Housing Starts for January and the Philadelphia Fed Manufacturing Survey for February seemed to have gained a little attention.

The upbeat data allowed the FEDWATCH tool, observed via Reuters, to suggest that the interest rate futures market shows US rates could peak close to 5.25% by July before dropping to 5.0% by the end of the year. The same signals a higher policy pivot than the 5.10% peak conveyed by the Fed in the December meeting, which in turn hints at a few more rate hikes from the US central bank and favors the US Dollar.

Recently, Cleveland Fed President Loretta Mester teased the recession woes while repeating the previous defense of the highest rates. Before that, St. Louis Federal Reserve's James Bullard bolstered the hawkish Fed bias while saying, “Continued policy rate increases can help lock in a disinflationary trend during 2023, even with ongoing growth and strong labor markets, by keeping inflation expectations low.”

On a different page, the fresh US-China tension and Russia’s refrain from stepping back when it comes to attacking Ukraine also weigh on the risk appetite and fuel the USD/CHF pair, due to the US Dollar’s safe-haven demand. That said, US President Joe Biden fired shots at his Chinese counterpart while conveying the expectations for a talk with the Chinese leader, during an interview with NBC News. “I think the last thing that Xi wants is to fundamentally rip the relationship with the United States and with me," said US President Biden per Reuters.

Against this backdrop, S&P 500 Futures dropped 0.30% to 4,086 while poking the weekly low marked the previous day by the press time. In doing so, the US stock futures remain depressed after falling the most in a month on Thursday. Additionally, the US 10-year Treasury bond yields rise to a fresh high since December 30, 2022, up five basis points to 3.896% by the press time. On the same line, two-year US Treasury bond yields print mild gains to end Thursday around 4.64%, the highest levels since November 2022, making rounds 4.679% at the latest.

Moving on, Swiss Q4 Industrial Production, prior 5.2% QoQ, will be important for the USD/CHF pair traders to watch clear directions. However, the bulls are less likely to relinquish control amid the hawkish Fed bias.

Technical analysis

A successful upside break of a three-month-old resistance line, now support around 0.9235, keeps USD/CHF buyers hopeful.