USD/CHF holds lower ground after reversing from five-week high. Sluggish markets, off in US, Canada restrict immediate moves. Risk-negative headlines, hawkish Fed challenges the bearish bias. USD/CHF flirts with the intraday low surrounding 0.9240 amid early Monday in Europe. In doing so, the major currency pair remains pressured toward the previous resistance line from late November 2022. However, a light calendar and holiday in the US, as well as in Canada, restrict immediate moves of the Swiss Franc (CHF) pair. Better-than-forecast prints of the US Consumer Price Index (CPI) and Retail Sales followed the previously flashed upbeat readings of employment and output data and propelled the US Treasury bond yields, as well as the US Dollar.
However, Friday’s mixed comments from the Fed officials seemed to have probed the US Dollar bulls and triggered the USD/CHF pair’s U-turn from the multi-day high. That said, Fed Governor Michelle Bowman recently said, “We are seeing a lot of inconsistent data in economic conditions,” as reported by Reuters. On the contrary, Richmond Fed President Thomas Barkin said that they are seeing some progress on inflation with demand normalizing, as reported by Reuters.
On the same line, the latest meeting between US Secretary of State Antony Blinken and China's top diplomat Wang Yi seemed to have failed in restoring the US-China ties. The reason could be linked to a Chinese diplomat’s comments saying that the US must change course and repair the damage done to Sino-US ties by indiscriminate use of force.
Against this backdrop, the S&P 500 Futures print mild losses even as Wall Street closed mixed. It’s worth noting that the US 10-year Treasury bond yields rose to the highest levels since early November in the last week and helped the US Dollar Index (DXY) to print a three-week uptrend, before retreating to 103.90 as of late.
Moving ahead, light calendar and holidays in the key markets may offer a sluggish trading session ahead of Wednesday’s key Minutes of the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting. Following that, the second reading of the US fourth quarter (Q4) Gross Domestic Product (GDP) will be important to forecast the USD/CHF moves.