- USD/CHF declines for the fourth consecutive day as bears attack June’s low.
- Yields drown the US dollar amid “technical recession”, SNB’s Q2 result also favors bears.
- Swiss KOF Leading Indicator, US PCE Price Index for July could direct immediate moves.
USD/CHF takes offers to refresh the monthly low near 0.9515 heading into Friday’s European session amid broad US dollar weakness.
The Swiss currency (CHF) pair’s latest losses could be linked to the recession fears in the US and extended south-run by the US Treasury yields. Also exerting downside pressure on the USD/CHF prices is the cautious mood ahead of the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index, expected 0.5% MoM for July versus 0.3% prior.
It’s worth noting that the US Dollar Index (DXY) drops to the lowest level since July 05 as the Treasury yields remain pressured around a three-month low amid recession fears. The US 10-year Treasury yields fade early Asian session rebound while declining to the fresh low since April, near 2.66% at the latest.
Following Fed Chair Jerome Powell’s teasing of “neutral rates”, USD/CHF traders should have traced the Flash readings of the US Q2 GDP, which marked the “technical recession” by declining for the second consecutive time, to decline further. That said, the first estimations of the US Q2 GDP printed -0.9% Annualized figure versus 0.5% expected and -1.6% prior. Further, the US Initial Jobless Claims also rose more than expected by 253K, with 256K during the week ended on July 22.
Elsewhere, US policymakers, including Fed’s Powell and Treasury Secretary Janet Yellen, tried to tame the economic recession fears but fail to succeed of late.
Even so, the downbeat yields and challenges for the hawkish Fed moves appear to have favored the US stock futures, as well as the Asia-Pacific shares, as USD/CHF traders await the Swiss KOF Leading Indicator for July, expected 95.2 versus 96.9 prior.
On a different page, the Swiss National Bank (SNB) posts the biggest ever first-half loss per Reuters and should have ideally weighed on the USD/CHF prices but did not. “The Swiss National Bank reported a first-half loss of 95.2 billion Swiss francs ($100.08 billion) on Friday, the biggest six-month loss posted by the central bank since it was set up in 1907,” said Reuters. The news also mentioned that the SNB's results were hit by stock market declines, falling bond prices and the franc's appreciation which severely dented the value of its massive foreign currency holdings.
Technical analysis
A clear downside break of the four-month-old ascending trend line, near 0.9600 by the press time, directs USD/CHF sellers towards the 16-month-long horizontal support zone near 0.9595-72.
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
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.