USD/CHF holds steady on Friday as the US Dollar recovers slightly from recent losses. The pair trades around 0.8013 after falling to 0.7949 on Thursday, its lowest level since June 17. Despite the rebound, USD/CHF remains on track to finish the week lower.
The Swiss Franc faces some pressure after dovish comments from Swiss National Bank Governing Board member Petra Tschudin. In an interview published Friday, Tschudin indicated that the SNB could cut interest rates below zero if necessary to keep medium-term inflation within its 0%-2% target range. She also suggested that stronger interest-rate expectations overseas have contributed to weakness in the Franc.
The US Dollar Index has recovered to around 98.81 after touching 98.56 earlier, but remains close to a three-month low and is heading toward a weekly decline of roughly 0.80%.
US economic data offered some support to the Dollar. The preliminary S&P Global Composite PMI rose to 56.0 in August from 54.5, reaching its highest level in 52 months. Services PMI also strengthened to 56.8 from 54.6, marking a 20-month high. However, manufacturing activity weakened slightly, with the Manufacturing PMI falling to 53.2 from 53.9.
The Dollar remains under broader pressure following the US Treasury’s decision to increase liquidity-support buybacks of longer-term government debt to at least $4 billion per operation. Scotiabank analysts argue that attempts to contain long-term yields could place greater downward pressure on the Dollar as markets continue to price US fiscal concerns.
Meanwhile, expectations for a Federal Reserve rate hike have faded following softer July employment and inflation figures. Markets currently see roughly a 65% probability that the Fed will leave rates unchanged next month. Attention is now shifting toward next week’s US Personal Consumption Expenditures inflation report, which could provide fresh clues about the Fed’s policy path.
Trade idea:
USD/CHF may remain range-bound above 0.7950; traders could buy dips toward 0.7980 for 0.8060, while a break below 0.7950 would favor further downside.