USD/CHF advances to 0.99 area on improved sentiment, USD strength

• Wall Street rises sharply following the quiet start.
• US 10-year T-bond yield turns positive on the day.
• US Dollar Index rises to 10-day highs above 96.

The USD/CHF pair extended its daily rally and came within a touching distance of the 0.99 mark boosted by improved market sentiment and the broad-based USD strength. As of writing, the pair was trading at 0.9885, adding 0.75% on a daily basis.

With major European currencies remaining under strong selling pressure on Tuesday, the greenback attracted investors’ attention and the US Dollar Index recovered all of the losses it recorded last week and broke above 96 to refresh its highest level since January 4 at 96.23. Additionally, the improved market sentiment as reflected by Wall Street’s sharp rise allowed T-bond yields to recover from daily lows and provided an additional boost to the buck. At the moment the DXY is up 0.65% on the day at 96.20.  

On the other hand, the positive mood weighed on traditional safe-havens such as the CHF in the NA session to help the pair push higher.  

Earlier today, the data published by the U.S. Bureau of Labor Statistics showed that the annual PPI remained steady at 2.5% in December to match analysts’ estimates. Although both the NY Fed’s Empire State Manufacturing Index and the IBD/TIPP Economic Optimism Index came in worse than expected, the greenback was able to preserve its bullish momentum.

Later in the session, markets will be paying close attention to the Brexit vote in the UK Parliament, which could cause volatility rise and impact the pair’s movements via markets’ dollar valuation.

Key technical levels