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USD/CHF sticks to intraday gains amid recovery in risk sentiment, modest USD strength

  • A combination of factors assists USD/CHF to snap a five-day losing streak to a multi-month trough.
  • The risk-on impulse undermines the safe-haven CHF and offers support amid reviving USD demand.
  • Bets for a 50 bps Fed rate cut in September should cap the USD and act as a headwind for the pair.

The USD/CHF pair attracts some buyers near the 0.8500 psychological mark on Tuesday and builds on the overnight goodish rebound from its lowest level since early January. Spot prices, for now, seem to have snapped a five-day losing streak and trade just above the mid-0.8500s during the early European session. 

Global equity markets rose sharply amid some bargain buying following the recent steep losses and undermine demand for the safe-haven Swiss Franc (CHF). Meanwhile, the risk-on impulse leads to a solid bounce in the US Treasury bond yields, which assists the US Dollar (USD) to recover further from a multi-month low touched on Monday. This, in turn, pushes the USD/CHF pair higher, though any meaningful appreciating move still seems elusive. 

The incoming softer US macro data fueled worries about a downturn in the world's largest economy and raised expectations for bigger interest rate cuts by the Federal Reserve (Fed). In fact, the markets are now pricing in a nearly 100% chance of a 50 basis points rate cut at the September FOMC policy meeting. This might keep a lid on the US bond yields and hold back the USD bulls from placing aggressive bets, which, in turn, should cap the USD/CHF pair. 

Furthermore, the risk of a broader Middle East conflict remains in play and should keep a lid on the market optimism. The fears resurfaced after Iran, Hamas and Lebanese group Hezbollah pledged to retaliate against Israel for last week’s assassination of Hamas political chief Ismail Haniyeh in Tehran. This should limit losses for the CHF and warrants caution before positioning for any further appreciating move for the USD/CHF pair in the absence of relevant US macro data.

US Dollar PRICE Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.

 USDEURGBPJPYCADAUDNZDCHF
USD 0.15%0.19%0.93%0.02%-0.17%0.28%0.32%
EUR-0.15% 0.07%0.80%-0.14%-0.32%0.07%0.18%
GBP-0.19%-0.07% 0.74%-0.18%-0.39%0.01%0.06%
JPY-0.93%-0.80%-0.74% -0.93%-1.09%-0.73%-0.50%
CAD-0.02%0.14%0.18%0.93% -0.19%0.20%0.25%
AUD0.17%0.32%0.39%1.09%0.19% 0.41%0.45%
NZD-0.28%-0.07%-0.01%0.73%-0.20%-0.41% 0.10%
CHF-0.32%-0.18%-0.06%0.50%-0.25%-0.45%-0.10% 

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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