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  • CHF continues to capitalize on risk-off flows on Friday.
  • US Dollar Index edges lower toward the 98 handle.
  • Nonfarm Payrolls in US is expected to retreat to 164K in July from 224K in June.

Just when it looked like the USD/CHF pair was rallying toward the critical parity mark on the back of Fed Chairman Powell’s comments on the monetary policy outlook on Wednesday, the sharp shift in the market sentiment caused the safe-haven CHF to gather strength and forced the pair to reverse its direction. After closing the previous day with a daily loss of 40 pips, the USD/CHF pair extended its slide and touched its lowest level in ten days at 0.9843. As of writing, the pair was trading a couple of pips above that level, losing 0.58% on the day.

US tariffs on Chinese imports weigh on sentiment

The United States President Trump yesterday announced that they will start imposing 10% tariff on the remaining $300 billion worth of Chinese imports to revive concerns over the potential negative impact of a  prolonged trade war on the global economy. The market reaction to Trump’s announcement dragged the 10-year US Treasury bond yield to its lowest level since November 2016 to show an intense flight-to-safety.  

Commenting on this development, “This move escalates trade tensions following the truce at the G20 and is reminiscent of the sharp increase in tariff uncertainty in May,” said TD Securities analysts.  

“The announcement follows high-level meetings held this week in Shanghai which have not advanced at the desired pace by the US administration despite apparent positive dialogue.”

Later in the session, the US Bureau of Labor Statistics will release the July employment report. Markets expect the Nonfarm Payrolls (NFP) to increase by 164,000 following June’s impressive reading at 224,000. The Unversity of Michigan is scheduled to publish its Consumer Sentiment Survey later in the day as well.  

Technical levels to watch for