USD/CHF extends losses to near 0.8850 due to improved risk appetite

USD/CHF maintains its downward trajectory, trading lower around 0.8850 during Thursday's Asian session. The US Dollar (USD) faces depreciation against the Swiss Franc (CHF) as US Treasury yields decline, driven by improved risk appetite. At the time of writing, the 2-year and 10-year US yields stand at 4.56% and 4.23%, respectively.

Traders assess the Federal Reserve's monetary policy outlook in light of robust inflation data and recent statements from Fed officials. Chicago Fed President Austan Goolsbee's remarks on Wednesday aimed to alleviate market concerns by suggesting that higher-than-expected consumer prices don't necessarily preclude the Federal Reserve from considering interest rate cuts in 2024.

Federal Reserve Vice Chair for Supervision Michael Barr attracted attention by reiterating the Federal Reserve's confidence, along with its core Federal Open Market Committee, in the trajectory of US inflation towards the Fed's 2% target.

On the other side, the Swiss Franc has faced downward pressure as consumer prices in the Swiss economy have notably slowed. In January, the monthly Consumer Price Index (CPI) increased by 0.2%, compared to expectations of a 0.6% growth, following a stagnant reading in December. Annual inflation significantly decelerated to 1.3%, below both expectations and the previous reading of 1.7%.

The Federal Statistical Office of Switzerland is scheduled to release Producer and Import Prices data on Thursday, with expectations leaning towards an improvement in January. Additionally, market attention will turn to Retail Sales data and Initial Jobless Claims from the United States.