USD/CHF Dips to 0.9060 as Swiss Franc Benefits from US Dollar’s Broad Weakness Ahead of Employment Data”

[[USD/CHF]] slips to 0.9060 during early Thursday trading, following an unsuccessful attempt to recover from a 22-month low reached the day before. The Swiss Franc (CHF) is buoyed by the US Dollar’s widespread weakness ahead of crucial employment figures.

The greenback experienced a brief rally on Wednesday due to disappointing US economic data sparking recession concerns. Nevertheless, the increasing likelihood of the US Federal Reserve (Fed) not raising interest rates in May, coupled with challenges to the greenback’s reserve currency status, seem to be exerting downward pressure on the US Dollar.

Regarding data, the ADP Employment Change for March fell to 145K, missing the 200K forecast and down from an upwardly revised 261K prior. Similarly, the final readings of S&P Global Composite and Services PMIs for March were also disappointing, with the former declining to 52.3 from 53.3 preliminary estimates and the latter falling to 52.6 from a previously expected 53.8. Most notably, the US ISM Services PMI for the same month amplified negative sentiment as it dropped to 51.2, well below the 54.5 forecast and 55.1 prior.

Conversely, Russia’s recent preference for the Chinese Yuan and the China-Brazil agreement to bypass the US Dollar as an intermediary currency are key factors recently undermining the greenback’s dominant position. In a similar vein, there are rumors that some US Congress members have proposed a Gold Standard Restoration Act to protect the US Dollar. The bill proposes re-linking the greenback to a fixed amount of gold, as was the case prior to 1971.

In other news, CME’s FedWatch Tool indicates a roughly 57.0% chance that the US central bank will halt its rate hike path in May.

In the midst of these developments, S&P 500 Futures show modest losses, echoing Wall Street benchmarks. However, bond yields remain under pressure, negatively impacting the US Dollar. Notably, the benchmark US 10-year Treasury bond yields have fallen for five consecutive days, reaching a seven-month low on Wednesday, while the two-year equivalent has also been on a four-day downward trend, recently bouncing back from 3.79%.

Looking ahead, the Swiss Unemployment Rate for March, anticipated to remain steady at 1.9%, will be followed by US Weekly Initial Jobless Claims, influencing intraday moves for the USD/CHF pair. Nevertheless, the primary focus will be on Friday’s US Nonfarm Payrolls (NFP) report for clearer direction.