On Thursday, a small USD decline sparked some profit-taking in the USD/CHF market.
The dollar should be supported by hawkish Fed views and rising US bond yields.
The risk-on atmosphere might destabilize the safe-haven CHF, limiting additional losses.
During the early North American session, the USD/CHF pair continued its steady intraday decline and hit new daily lows near 0.9240.
On Thursday, the US dollar saw a minor drop from its highest level since April 8, prompting some profit-taking in the USD/CHF pair. The pair has already dropped roughly 30-35 pips from intraday highs near 0.9270, however additional fall is unlikely.
If price pressures continue to rise, investors expect the Fed to begin tightening its ultra-accommodative monetary policy sooner rather than later. This, together with a sharp rise in US Treasury bond yields, should provide a tailwind for the dollar and provide support for the USD/CHF pair.
On the economic front, first weekly jobless claims in the United States declined more than expected to 364K for the week ending June 25. The good reading was partially offset by an upward revision of the prior week’s reading to 415K, and the greenback did not benefit.
Meanwhile, the underlying bullish tone in the financial markets, as seen by a generally upbeat mood in the equity markets, may continue to dampen demand for the safe-haven Swiss franc. This could be yet another reason that aids any significant decrease in the USD/CHF pair.
Investors may also choose to stay on the sidelines ahead of the US monthly jobs report (NFP) on Friday, rather than taking any bold wagers. The carefully watched data might have an impact on the Fed’s policy outlook and drive the greenback in the short term.
The ISM Manufacturing PMI for the United States will be released next. Any large deviation from the predicted data could add volatility to the USD/CHF pair and create trading opportunities. However, the market’s overall reaction is more likely to be restricted./n
