USD/CHF slides towards 0.9250 as US Dollar traces softer yields amid sluggish markets
- USD/CHF prints three-day losing streak, renews intraday low of late.
- Swiss ZEW Survey – Expectations improved in December to -42.8.
- Lack of market’s confidence in the US Dollar’s recovery favors bears amid mostly downbeat sentiment.
- Yields refreshed multi-day top on China, Russia concerns before easing amid a lackluster trading session.
USD/CHF takes offers to refresh intraday low around 0.9267 as it cheers the US Dollar pullback amid inactive markets during the holiday season. In doing so, the Swiss currency (CHF) pair fails to justify the previous day’s Doji candlestick amid firmer Swiss ZEW Survey numbers for December.
As per the latest Swiss ZEW Survey – Expectations, the sentiment gauge improved in December to -42.8 versus the -50.5 forecasts and -57.5 previous readings. On the other hand, US Pending Home Sales for November dropped to -37.8% YoY versus -36.7% expected and -37.0% prior while Richmond Fed Manufacturing Index for December improved to 1.0 versus -4.0 anticipated and -9.0 prior.
Also weighing on the quote could be the latest retreat in the US Treasury yields, which in turn weigh on the US Dollar. That said, the US 10-year Treasury yields drop 2.8 basis points to 3.858% by the press time, after rising the most since October 19 the previous day.
While the market’s consolidation and a lack of major data could be held responsible for the USD/CHF pair’s latest weakness, the Swiss Franc’s (CHF) safe-haven appeal and recently firmer data seem to favor the bears amid receding hawkish bias over the Fed.
That said, news from Reuters suggesting inconsistent virus details from Beijing and multiple economies announcing fresh testing requirements from China previously weighed on the market sentiment and propelled the US Treasury yields. “China reported three new COVID-related deaths for Tuesday, up from one for Monday - numbers that are inconsistent with what funeral parlors are reporting, as well as with the experience of much less populous countries after they re-opened,” reported Reuters.
Additionally challenging the risk takers is Russia’s rejection of peace with Ukraine unless it accepts the treaty allowing additional territories, as well as an escalated war in the city of Kherson.
Against this backdrop, stocks in the Asia-Pacific region trade mixed while the S&P 500 Futures print mild gains, despite the downbeat closing of the Wall Street benchmarks.
Moving on, the USD/CHF pair may witness the continuation of the latest moves amid a likely absence of major data/events. Even so, the US Initial Jobless Claims, Treasury yields and headlines surrounding Russia, as well as China, should be eyed for intraday directions.
Technical analysis
Wednesday’s Doji candlestick and a two-week-old ascending support line, close to 0.9235 by the press time, challenge USD/CHF bears. Recovery moves, however, remain elusive unless crossing the 21-DMA hurdle surrounding 0.9330.