The USD/CHF pair remains range-bound around 0.8790 during Asian trading hours on Thursday, showing limited movement despite improved US Treasury yields. The US Dollar Index (DXY) inches lower to near 103.90, while 2-year and 10-year US Treasury yields stand at 4.65% and 4.28%, respectively.

Preliminary US Gross Domestic Product Annualized (Q4) figures show a 3.2% rise, slightly below the expected 3.3%. However, the preliminary US Gross Domestic Product Price Index (Q4) increased by 1.7%, exceeding expectations and indicating a delay in expectations for the Federal Reserve’s (Fed) first rate cut. According to the CME FedWatch Tool, the probability of rate cuts in March is at 3.0%, decreasing to 19.3% in May and rising to 52.6% in June. New York Federal Reserve (Fed) President John Williams stated that while progress is needed to reach the Fed’s 2% inflation target, the possibility of interest rate cuts remains.

Market attention is focused on the release of key US Personal Consumption Expenditures – Price Index data, which could influence the Fed’s monetary policy stance.

On the Swiss side, the ZEW Survey – Expectations indicates improved business conditions for February, with a reading of 10.2. Expectations of lower interest rates by the Swiss National Bank (SNB) in the second half of the year also support the sentiment. Investors await the Gross Domestic Product (GDP) data by the Swiss State Secretariat for Economic Affairs (SECO) on Thursday, expecting a decline in the fourth quarter of 2023.

Trade Idea:

Monitor USD/CHF for potential breakout opportunities as market sentiment evolves. Consider adjusting trading positions based on the outcome of the US Personal Consumption Expenditures – Price Index data and Swiss GDP figures.