- A combination of factors dragged USD/CHF lower for the second day in a row on Thursday.
- As US bond yields retreated, the less aggressive FOMC Minutes acted as a direction for the dollar.
- Nervousness between Russia and Ukraine benefited the safe haven CHF and also contributed to the selling bias.
The pair USD/CHF fell to a 2-week low during the early American session, with bears looking to extend the bearish path further below 0.92000.
The pair added to overnight losses and remained under bearish pressure for the second day in a row on Thursday amid fresh selling around the USD. Against the backdrop of the less aggressive FOMC Minutes released on Wednesday, falling US Treasury yields turned out to be a key factor that did not help the dollar preserve modest intraday gains.
Fed officials agreed it would be appropriate to undo accommodative policy at a faster-than-expected pace if inflation doesn’t come down as expected. However, the Minutes failed to reinforce expectations of a 50bp rate hike in March. Apart from this, the global flight to safety, amid the intensifying conflict between Russia and Ukraine, dragged down US bond yields.
In the latest geopolitical developments, Russian media reported that Ukrainian military forces fired mortars and grenades at four locations in the Luhansk People’s Republic (LPR). In addition to this, the Organization for Security and Cooperation (OSCE) in Europe recorded multiple shelling incidents along the line of contact in eastern Ukraine in the early hours of Thursday.
Meanwhile, the Russian Defense Ministry released a video on Thursday showing a logistics unit returning to its base of operations after completing drills. However, US Defense Secretary Lloyd Austin dismissed Russia’s claims that it is withdrawing troops, saying the US is seeing some Russian forces inching closer to the Ukrainian border. .
The mixed headlines kept investors on edge, which was evident in a generally weaker tone around equity markets. This, in turn, benefited the relative safe haven status of the Swiss franc and dragged the USD/CHF pair down to 0.9200. A convincing break below will be seen as a new trigger for bearish traders and will set the stage for further losses.
On the economic data front, US weekly initial jobless claims unexpectedly rose to 248,000 during the week ending February 11 and the previous reading was also revised slightly higher to 225,000. Elsewhere, the Philadelphia Fed manufacturing index fell more than expected to 16 in February from 23.2 in the previous month, and did little to support the USD.
Technical levels
Source: Fx Street
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