- US Dollar Index pushes above the 99 handle on Tuesday.
- Market sentiment remains sour amid fading trade optimism.
- The unemployment rate in Switzerland stays unchanged at 2.3% as expected.
The USD/CHF pair slumped to a fresh weekly low of 0.9905 on Tuesday before staging a decisive rebound in the second half of the day. As of writing, the pair was virtually unchanged on a daily basis at 0.9944.
Risk perception continues to drive the markets
Earlier in the day, the Chinese Foreign Ministry said that it is preparing to retaliate to the United States’ (US) backlisting of Chinese firms and later urged the Trump administration to remove the sanctions on these companies. Furthermore, Bloomberg reported that the White House was planning to restrict capital flows from China into the US government pension funds.
Both of these developments forced investors to flee to safe-haven assets such as the CHF and caused the pair to push lower during the European trading hours.
Meanwhile, the only data from Switzerland revealed that the unemployment rate remained steady at 2.3% in September to match the previous reading and the market expectation and was largely ignored by the market participants.
However, the US Dollar Index, which tracks the Greenback’s value against a basket of six major currencies, gained traction in the second half of the day to point out to a broad-based USD strength. Although there were no macroeconomic drivers behind this move, the fact that major European currencies, especially the British Pound, faced heavy selling pressure on Tuesday boosted the demand for the USD as a better alternative.
Technical levels to watch for