USD/CHF sticks to gains near 0.9300 mark, lacks follow-through amid risk-off
- USD/CHF gained traction for the second successive day amid a broad-based USD strength.
- Hawkish Fed expectations, surging US bond yields continued acting as a tailwind for the USD.
- The risk-off impulse benefitted the safe-haven CHF and capped any further gains for the pair.
The USD/CHF pair maintained its bid tone through the first half of the European session and was last seen hovering near the top end of its weekly trading range, around the 0.9300 mark.
The pair built on the previous day's positive move and continued gaining traction for the second consecutive session on Wednesday amid a broad-based US dollar strength. Expectations for an early policy tightening, along with surging US Treasury bond yields acted as a tailwind for the greenback.
Investors now seem convinced that the Fed would begin rolling back its massive pandemic-era stimulus as soon as November. Adding to this, worries that the continuous surge in crude oil/energy prices will stoke inflation have been fueling speculation about a possible interest rate hike in 2022.
The combination of factors pushed the yield on the benchmark 10-year US government bond to the highest level since June, which extended additional support to the greenback. That said, the risk-off impulse underpinned the traditional safe-haven Swiss franc and capped the upside for the USD/CHF pair.
Concerns that a faster than expected rise in inflation could derail the global economic recovery weighed on investors' sentiment. fragile US-China trade ties, China Evergrande’s debt crisis and a stalemate over the US debt ceiling triggered a fresh wave of the global risk-aversion trade.
Nevertheless, the USD/CHF pair, so far, has managed to stick to its intraday gains as traders now look forward to the US ADP report for a fresh impetus. This, along with the US bond yields, might influence the USD price dynamics and produce some trading opportunities around the USD/CHF pair.
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