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USD/CHF Extends Fed-Induced Losses Toward 0.9020 Support, With Central Banks and US NFP in Focus
The USD/CHF exhibits a three-day decline as sellers flirt with an 18-month low. Fed's dovish raise sank the US Dollar, and weak US statistics also boost USD/CHF bears. ECB and BoE monetary policy decisions could increase market volatility, making them essential to monitor. US jobs statistics eyed as Fed Chair Powell signaled ready to decrease the rates.
USD/CHF remains depressed at the lowest levels since August 2021 as bears enjoy a three-day slump near 0.9065 during Thursday’s Asian session. In doing so, the Swiss Franc (CHF) pair extends the losses caused by the US Federal Reserve as market participants anticipate the major central bank decision and the January US employment data.
USD/CHF retested a multi-day low the day prior as negative US data and the Fed's dovish rate hike combined.
In spite of the fact that the Fed matched market expectations by lifting the benchmark rate by 0.25 percentage points, the Monetary Policy Statement weighed on the U.S. dollar by stating that inflation "has moderated but remains excessive."
Adding support to the USD weakening were comments from Fed Chair Jerome Powell as he remarked “We can proclaim that a deflationary process has begun.” The policymaker also recognises the need for rate reduction by the end of 2023 if inflation falls significantly quicker than anticipated. Even yet, Fed’s Powell said that a couple more rate hikes are needed to attain it.
Elsewhere, the US ISM Manufacturing PMI fell to its lowest level since June 2020, at 47.4 in January compared to 48.0 projected and 48.4 previously. Further, the ADP Employment Change likewise slipped to a one-year low with 106K the current result compared to the 178K market projections and the upwardly revised previous figure of 253K. In contrast, JOLTS Job Openings increased to 11.01 million in December, above the average estimate of 10.25 million and the prior reading of 10.44 million.
Against this environment, Wall Street rallied as the US 10-year Treasury yields plummeted the most in two weeks. It should be noted that benchmark rates are licking their wounds near 3.41 percent, while S&P 500 Futures are posting modest gains as of press time.
Ahead of the monetary policy meetings of the European Central Bank (ECB) and the Bank of England, USD/CHF traders should focus on market movements influenced by these central banks (BoE). However, substantial attention should be devoted to Friday’s US Jobs data. Nonfarm Payrolls (NFP), which is anticipated to decrease to 185K from 223K previously, will be crucial to monitor.
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