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The USD/CHF pair retreated below 0.8800 and hit a daily low of 0.8760. FOMC minutes from the July meeting left the door open for another hike, and surging US bond yields limit the downside for the US dollar.
The USD DXY Index rose to its highest level since January at 103.60, driven by hawkish bets on the Fed and surging US yields. Swiss investors await Friday’s Industrial Production figures from Q2.
The dollar’s robust stance is propelled by rising US yields, as investors bet on the Fed hiking at least once more in this cycle. The US 10-year bond yield surged to its highest level since October 2022, and the 2 and 5-year yields experienced upward movements.
The FOMC minutes showed members are concerned with a hot labour market threatening inflation, leaving the door open for another hike. Jobless Claims for the second week of August rose to 239,000, compared to the projected 240,000.
Markets anticipate no Fed rate increase in September, with a nearly 40% chance of one in November. Bullish exhaustion on the USD/CHF chart indicates a technical outlook that is neutral to negative.
