USD/CHF retreats from six-month highs and falls below 0.9200

• USD/CHF moves below 0.9200 awaiting economic data from both countries.
• An analysis by ANZ Bank showed that the CHF has become the highest-performing currency among G10 currencies.
• The US dollar strengthens due to markets’ caution over the path of the Fed’s interest rates, coupled with high US Treasury yields.

USD/CHF retreats from the six-month high marked on Wednesday and falls towards 0.9175 during the European session on Thursday. The Swiss Franc (CHF) is receiving support, and this can be attributed to a recent analysis by ANZ Bank economists. Their analysis has highlighted that the CHF has become the highest performing currency among the G10 currencies relative to the US Dollar (USD).

However, the Swiss National Bank (SNB) is expected to maintain a hawkish stance in its monetary policy. The central bank is likely to maintain this approach to protect itself from a possible rise in imported inflation, even though it interrupted its rate-hiking cycle at its September meeting.

Persistent concerns about China’s troubled real estate sector and concerns about economic challenges from rapidly rising borrowing costs. These concerns have led to a risk-averse sentiment among investors, which has benefited the CHF due to its reputation as a safe haven currency. Consequently, the USD/CHF pair could see its gains limited.

The DXY Dollar Index retreats from its highest levels since December, trading lower around 106.50 at the time of writing. However, the US Dollar (USD) strengthened due to risk aversion, rising US Treasury yields on an impending US Government Shutdown, and US economic data. .stronger than expected.

The positive evolution of US Treasury yields is strengthening the positioning of the Dollar. The 10-year US Treasury yield has reached multi-year highs, standing at 4.62%.

Additionally, strong US economic data is supporting the strength of the Dollar. In August, US durable goods orders rebounded with a 0.2% increase, a notable reversal from the previous month’s 5.6% decline. This result exceeded the expectations of the markets, which had predicted a decrease of 0.5%.

Separately, EIA crude oil stock change data for the week ending September 22 showed values ​​decreased by 2.17 million barrels, compared to the 2.13 million reductions seen a week earlier. Markets had expected oil inventories to decline by 0.32 million barrels, a much smaller figure.

Neel Kashkari, president of the Minneapolis Federal Reserve, recently indicated the possibility of further interest rate hikes in the future. The hawkish tone from a Fed member could have supported the dollar’s bullish momentum.

Additionally, Kashkari suggested that the option of keeping interest rates unchanged at their current levels remains open, especially if any potential rate cut is postponed further. These statements by Fed officials are contributing to the dollar’s upward trajectory.

On Friday, market participants will be watching Swiss actual retail sales data. Additionally, the US core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred measure of consumer inflation, will be released, which is expected to decline from 4.2% to 3.9%.

USD/CHF technical levels to watch