- USD/CHF retreats from monthly high, stays pressured around intraday low of late.
- Softer US PPI allowed markets to brace for Fed’s anticipated aggressive rate hike.
- Yields ease from 11-year high, stock futures dribble around 17-month low.
- SECO forecasts, US Retail Sales may entertain traders ahead of FOMC.
USD/CHF bulls take a breather at a one-month high as the quote stays pressured around the intraday low near 0.9995 during the mid-Asian session on Wednesday. The Swiss currency (CHF) pair’s latest retreat could be linked to the market’s positioning for today’s US Federal Reserve (Fed) monetary policy, amid a pullback in the US Treasury yields.
That said, US 10-year Treasury bond yields drop 3.9 basis points (bps) to 3.45% as the bond coupons ease from the fresh high since 2011. The same underpins the mildly bid S&P 500 Futures around 3,750 to exert downside pressure on the USD/CHF prices.
Underlining the latest pullback in the bond coupons could be the US Producer Price Index (PPI) for May. The PPI matched 0.8% MoM forecasts, also easing to 10.8% YoY figures versus 10.9% expected and prior readouts. The PPI ex Food & Energy, known as Core PPI, dropped below 8.6% YoY forecasts to 8.3%.
It should be noted that the CHF’s safe-haven status also allows the pair sellers to take entries amid the rep-Fed cautious.
Rising expectations of a 75 bps rate hike from the Fed join the diplomatic push from the White House officials to hint at the US dollar’s rebound, which challenges the EUR/USD pair. White House (WH) Economic Adviser Brian Deese and National Economic Council Deputy Director Bharat Ramamurti were among the US diplomats who highlighted the inflation woes and showed readiness to battle the same during their interviews with CNN and Bloomberg respectively.
Elsewhere, covid woes in China, the world’s second-largest economy, also weigh on the metal prices. Beijing reported the highest coronavirus cases in three weeks the previous day and called for more activity restrictions. Shanghai, on the other hand, marked ease into the COVID-19 cases but keeps the recently announced limits to curb the virus from spreading too fast.
Looking forward, the quarterly release of Switzerland’s SECO Economic Forecasts will precede the US Retail Sales for May, expected 0.2% MoM versus 0.9% prior, to direct intraday USD/CHF moves ahead of the Federal Open Market Committee (FOMC).
Technical analysis
The overbought RSI line joins multiple hurdles around 1.0050-65 to challenge USD/CHF bulls. The pair sellers, however, need validation from the weekly support line surrounding 0.9900.
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 consolidates gains below 1.0700 amid upbeat mood
EUR/USD is consolidating its recovery below 1.0700 in the European session on Thursday. The US Dollar holds its corrective decline amid improving market mood, despite looming Middle East geopolitical risks. Speeches from ECB and Fed officials remain on tap.
GBP/USD clings to moderate gains above 1.2450 on US Dollar weakness
GBP/USD is clinging to recovery gains above 1.2450 in European trading on Thursday. The pair stays supported by a sustained US Dollar weakness alongside the US Treasury bond yields. Risk appetite also underpins the higher-yielding currency pair. ahead of mid-tier US data and Fedspeak.
Gold price shines amid fears of fresh escalation in Middle East tensions
Gold price rebounds to $2,380 in Thursday’s European session after posting losses on Wednesday. The precious metal holds gains amid fears that Middle East tensions could worsen and spread beyond Gaza if Israel responds brutally to Iran.
Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court
Ripple (XRP) price hovers below the key $0.50 level on Thursday after failing at another attempt to break and close above the resistance for the fourth day in a row.
Have we seen the extent of the Fed rate repricing?
Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.