- USD/CHF sees fresh supply on Thursday, although the downside appears restricted.
- Expectations for a less dovish Fed stance and increased US bond yields may support the dollar.
- Risk sentiment could weaken the protected haven CHF and support the main currency.
The USD/CHF pair is looking to capitalize on the previous day’s rebound from near the 0.8800 level, or a one-week low, and is attracting fresh sellers during Thursday’s Asian session. Spot prices are currently trading around 0.8825, down just over 0.2% on the day, although any significant decline appears elusive amid bullish US dollar (USD) sentiment.
Investors now appear convinced that US President-elect Donald Trump’s expansionary policies are likely to escalate inflation and limit the Federal Reserve’s (Fed) ability to aggressively ease monetary policy. Moreover, recent cautious comments from Fed policymakers on further policy easing continue to support the rise in U.S. Treasury yields. This in turn is helping the USD Index (DXY), which tracks the dollar against a basket of currencies, to hold steady near the year-to-date level reached last week, which should act as a tailwind for the USD/CHF pair.
Meanwhile, the initial market reaction to Russian President Vladimir Putin’s agreement to change the country’s nuclear doctrine proved short-lived, as comments from Russian and U.S. officials eased fears of a nuclear war breaking out. This maintains a generally positive tone in global stock markets and weakens demand for the safe-haven Swiss franc (CHF). The prevailing risk-on sentiment may continue to limit the decline in the USD/CHF pair and warrants some caution for aggressive bearish investors.
Market participants are now eagerly awaiting the U.S. economic report, which includes the release of the usual weekly unemployment claims, the Philly Fed Manufacturing Index and existing home sales data. This, along with speeches from many influential FOMC members, will impact US bond yields and the dollar. In addition, geopolitical developments should create short-term trading opportunities around the USD/CHF pair. Nevertheless, the fundamental background suggests that the path of least resistance for spot prices is up.
PRICE in US dollars this month
The table below shows the percentage change in the United States Dollar (USD) against the major currencies traded this month. The US dollar was strongest against the euro.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 3.16% | 1.94% | 1.98% | 0.24% | 1.03% | 1.68% | 2.25% | |
| EUR | -3.16% | -1.19% | -1.13% | -2.83% | -2.07% | -1.41% | -0.89% | |
| GBP | -1.94% | 1.19% | 0.06% | -1.66% | -0.89% | -0.23% | 0.27% | |
| JPY | -1.98% | 1.13% | -0.06% | -1.71% | -0.95% | -0.29% | 0.25% | |
| BOOR | -0.24% | 2.83% | 1.66% | 1.71% | 0.78% | 1.45% | 1.96% | |
| AUD | -1.03% | 2.07% | 0.89% | 0.95% | -0.78% | 0.67% | 1.17% | |
| NZD | -1.68% | 1.41% | 0.23% | 0.29% | -1.45% | -0.67% | 0.50% | |
| CHF | -2.25% | 0.89% | -0.27% | -0.25% | -1.96% | -1.17% | -0.50% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select 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).
