- USD/CHF catches aggressive bids at the start of a new week amid the US-China trade deal optimism.
- Easing US recession fears and the Fed’s hawkish pause boost the USD and also support spot prices.
- The upbeat market mood undermines the safe-haven CHF and provides an additional lift to the pair.
The USD/CHF pair builds on its modest gap-up opening at the start of a new week and gains strong positive traction during the early part of the European session. The momentum is sponsored by the latest optimism over the US-China trade deal and lifts spot prices beyond mid-0.8400s, or over a one-month high in the last hour.
The US Dollar (USD) strengthens across the board following the positive outcome from the first round of high-level US-China trade talks held over the weekend in Geneva, Switzerland. In a rare joint statement, the US and China announced that both delegations agreed to substantially lower tariffs for an initial period of 90 days, marking the end of the tit-for-tat tariffs war between the world’s two largest economies. This, in turn, helps to ease market concerns about a US recession, which, in turn, provides a strong boost to the US Dollar (USD) and the USD/CHF pair.
Meanwhile, the Federal Reserve’s (Fed) hawkish signal last week, that it is not leaning towards cutting interest rates anytime soon, continues to push the US Treasury bond yields higher. In fact, the yield on the benchmark 10-year US government bond spikes to its highest level since April 10 and turns out to be another factor benefiting the buck. Apart from this, the risk-on impulse – as depicted by a strong rally across the global equity markets – is seen undermining the safe-haven Swiss Franc (CHF) and further contributing to the USD/CHF pair’s strong intraday positive move.
Moving ahead, there isn’t any relevant market-moving economic data due for release from the US on Monday. However, trade-related optimism should continue to act as a tailwind for the USD and support prospects for a further appreciating move for the USD/CHF pair. Traders now look forward to this week’s release of US inflation figures – the Consumer Price Index (CPI and the Producer Price Index (PPI) on Wednesday and Thursday, respectively. Apart from this, Fed Chair Jerome Powell’s appearance on Thursday might provide cues about the future rate cut and drive the USD.
