- CHF struggles to capitalize on risk-off atmosphere on Wednesday.
- US Dollar Index clings to modest recovery gains above 97.50.
- Coming up: Speech by Chicago Fed President Charles Evans.
The USD/CHF pair slumped to its lowest level since late June at 0.9704 earlier in the week and went into a recovery stage. After closing the previous day 50 pips higher, the pair stretched higher today and was last seen trading at 0.9795, adding 0.33% on a daily basis.
The risk-off flows since late last week provided a strong boost to the safe-haven CHF and revived concerns over the Swiss National Bank (SNB) possibly intervening in the FX market to limit the currency’s appreciation, especially against the euro. Assessing the SNB’s other options, “The ECB being set to deliver a significant easing package at the September meeting is likely to put even more pressure on SNB to follow suit, i.e. go further negative and possibly expand its balance sheet further,” Danske Bank analysts said.
Dollar continues to erase losses
Furthermore, the US Dollar Index (DXY), which tracks the dollar’s value against a basket of six major currencies, is posting modest daily gains at 97.70 to reveal a stronger dollar today. However, the fact that the 10-year US Treasury bond yield is losing more than 4% on a daily basis suggests that the DXY’s correction is technical and is unlikely to gather momentum unless supported by fundamental developments.
Later in the day, the Federal Reserve will publish its Consumer Credit Change report. Furthermore, Chicago Fed President Charles Evans is scheduled to deliver a speech.
Technical levels to watch for
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