The USD/CHF pair is rising for the fourth consecutive day during early Friday, taking the bids to refresh weekly top. This follows the general US Dollar strength amid a light calendar ahead of the fourth quarter (Q4) Industrial Production for Switzerland. The US Dollar has a lot to justify the latest rise, including strong US data, hawkish Fed talks, geopolitical risks emanating from China, and strong US Treasury bond yields.
The Producer Price Index (PPI) for January gained major attention as it jumped the most since June with 0.7% MoM figure. Also positive for the pair was the improvement in the US Initial Jobless Claims for the week ended on February 10, 194K versus 200K expected and 195K prior. The FEDWATCH tool, observed via Reuters, suggests that the interest rate futures market shows US rates could peak close to 5.25% by July before dropping to 5.0% by the end of the year. This signals a higher policy pivot than the 5.10% peak conveyed by the Fed in the December meeting, which in turn hints at a few more rate hikes from the US central bank and favors the US Dollar.
Recently, Cleveland Fed President Loretta Mester teased the recession woes while repeating the previous defense of the highest rates. St. Louis Federal Reserve’s James Bullard also bolstered the hawkish Fed bias while saying, “Continued policy rate increases can help lock in a disinflationary trend during 2023, even with ongoing growth and strong labor markets, by keeping inflation expectations low.”
The risk appetite has taken a hit due to the fresh US-China tension and Russia’s refrain from stepping back when it comes to attacking Ukraine. US President Joe Biden fired shots at his Chinese counterpart while conveying the expectations for a talk with the Chinese leader, during an interview with NBC News. “I think the last thing that Xi wants is to fundamentally rip the relationship with the United States and with me,” said US President Biden per Reuters. This has weighed on the S&P 500 Futures, which dropped 0.30% to 4,086 while poking the weekly low marked the previous day by the press time. The US 10-year Treasury bond yields have also risen to a fresh high since December 30, 2022, up five basis points to 3.896% by the press time.
The Swiss Q4 Industrial Production, prior 5.2% QoQ, will be important for the USD/CHF pair traders to watch clear directions. However, the bulls are less likely to relinquish control amid the hawkish Fed bias. A successful upside break of a three-month-old resistance line, now support around 0.9235, keeps USD/CHF buyers hopeful.
The US Dollar’s strength has been evident over the last few days, with strong US data, hawkish Fed talks, geopolitical risks emanating from China, and strong US Treasury bond yields all playing a role in the Dollar’s appreciation. The Producer Price Index (PPI) for January jumped the most since June with 0.7% MoM figure, while the US Initial Jobless Claims for the week ended on February 10, 194K versus 200K expected and 195K prior. The FEDWATCH tool, observed via Reuters, suggests that the interest rate futures market shows US rates could peak close to 5.25% by July before dropping to 5.0% by the end of the year, signaling a higher policy pivot than the 5.10% peak conveyed by the Fed in the December meeting.
The US-China tension and Russia’s refrain from stepping back when it comes to attacking Ukraine have weighed on the risk appetite. US President Joe Biden fired shots at his Chinese counterpart while conveying the expectations for a talk with the Chinese leader, during an interview with NBC News. This has weighed on the S&P 500 Futures, which dropped 0.30% to 4,086 while poking the weekly low marked the previous day by the press time. The US 10-year Treasury bond yields have also risen to a fresh high since December 30, 2022, up five basis points to 3.896% by the press time.
The Swiss Q4 Industrial Production, prior 5.2% QoQ, will be important for the USD/CHF pair traders to watch clear directions. However, the bulls are less likely to relinquish control amid the hawkish Fed bias. A successful upside break of a three-month-old resistance line, now support around 0.9235, keeps USD/CHF buyers hopeful. The US Dollar’s strength is likely to remain in place, barring any major negative news, and the pair could continue to rise in the near term.
