USD/CHF Edges Lower, Low Swiss Yields Limit Dollar Losses

Although USD/CHF has drifted lower, further losses should be limited given the Swiss currency’s growing yield disadvantage with support on approach to 0.9600.

USD/CHF gradually lost traction late in US trading on Wednesday as the US currency lost ground.

There were sharp moves in European bond yields during the European session on Thursday. German yields moved above the 0.50% level for the first time since early 2016 while peripheral yields also moved higher.

Higher European yields undermined franc support given the very low Swiss yield structure with Swiss 10-year yields still in negative territory.

There was also upward pressure on US yields during the session which provided some degree of protection to the US currency.

EUR/CHF moved significantly higher which cushioned USD/CHF from major selling pressure.

There were mixed US data releases during the session as the ADP employment report missed expectations with an increase in private-sector jobs of 158,000 for June compared with consensus forecasts of 185,000 for the month.

In contrast, there was an increase in the ISM non-manufacturing index to 57.4 for June from 56.9 previously and contrary to expectations of a small decline.

EUR/USD maintained a strong tone and continued to challenge the 1.1400 resistance area as trends in bond yields continued to dominate markets.

Overall, USD/CHF declined to the 0.9630 area in late European trading.

There will be further very choppy trading surrounding Friday’s US employment data with USD/CHF rallies on any headline strength liable to be faded given expectations that the ECB will push towards some removal of policy accommodation.

USD/CHF 4-Hour Chart


Tim is a contributing author to He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.