The USD/CHF retests the bearish trend around 0.8950 ahead

EnclaveFX Ltd
Jun 28, 2023

Before Wednesday's European session, the USD/CHF consolidates its losses by printing a mild gain around 0.8945, ending a two-day losing streak. Therefore, Swiss Franc (CHF) pairs also justify traders' preference for the US Dollar amid cautious moods and hawkish Fed bets.

While the S&P500 Futures pare a two-day high with mild losses, the US Treasury bond yields remain low after rising in two consecutive days, illustrating the market's erratic movement.

USD/CHF is also able to grind higher due to contrasting headlines surrounding China and upbeat US data.

Joe Biden said China has enormous problems late Tuesday about the China news. As a result of his comments, the Wall Street Journal (WSJ) said, “As concerns grow about the power of the technology in the hands of US rivals, the Biden administration is considering new restrictions on exports of artificial intelligence chips to China.”

The People's Bank of China's (PBoC) lower-than-expected fixing of the USD/CNY price and headlines suggesting Asian lobbyists are advocating for easier rules to list Chinese stocks overseas teased oil traders. The USD was further weighed down by the selling of the greenback by major Chinese state banks, according to Reuters.

According to the US DGO report released on Tuesday, the US Durable Goods Orders in May surged 1.7% compared to the market's estimate of -1.0% and the prior estimate of 1.2%. In addition, the Conference Board's Consumer Confidence Index increased from 102.5 in May to 109.7 in June. In other words, US housing prices climbed to 0.7% in April from 0.5% in previous readings (revised), compared to the 0.3% expected. According to the S&P/Case-Shiller Home Price Index, prices fell by 1.7% YoY in April, down from -1.1% previously, but better than the forecast of -2.6%. Meanwhile, new home sales increased 12.2% MoM in May from 3.5% in April, compared with 0.5% anticipated, while Richmond Fed Manufacturing improved to -7.0 from -15.0 in May.

In advance of Fed Chairman Jerome Powell's speech, the Swiss ZEW Survey for June will precede the Swiss National Bank's (SNB) Quarterly Bulletin.


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