- The USD/CHF pair is exhibiting upward momentum, trading near the 0.8960 level as the U.S. Dollar finds renewed strength despite a mixed bag of macroeconomic indicators.
- Initial jobless claims in the U.S. climbed to 241,000, and the ISM Manufacturing PMI edged down to 48.7, while inflationary pressures persist amid discussions surrounding potential trade policy shifts.
- The short-term technical outlook suggests a bullish bias, with a support level identified at 0.8920 and resistance levels observed near 0.9000 and 0.9040.
The USD/CHF is trading higher, extending its advance into the upper 0.8900s following a data-rich Thursday that spurred fresh speculation regarding potential Federal Reserve rate cuts. Despite the ISM Manufacturing PMI and the jobless claims data signaling ongoing vulnerabilities in the labor market and a contraction in the manufacturing sector, the U.S. Dollar maintained its ground. This resilience was underpinned by a relatively stable U.S. Dollar Index (DXY) and risk-on sentiment ahead of Friday’s highly anticipated nonfarm payrolls report, a key indicator of the overall health of the U.S. economy. Market participants are closely watching this report for further clues about the Fed’s future monetary policy decisions.
For the week ending April 26, U.S. initial jobless claims experienced a notable increase, reaching 241,000. This figure represents a rise from the previous week’s revised total of 223,000 and surpassed consensus estimates, which had anticipated a more modest increase. The reported figure marks the highest level observed since August 2023, intensifying concerns that the labor market’s cooling trend may be more pronounced than initially projected. Concurrently, the ISM Manufacturing PMI registered a slight decrease, falling to 48.7 from March’s 49.0. This reading indicates that the manufacturing sector remains in contraction territory, with both new orders and production components exhibiting signs of deceleration. The employment subindex, however, showed a marginal improvement, rising from 44.7 to 46.5, suggesting a continued, albeit gradual, reduction in factory payrolls.
The Prices Paid Index, a key component of the ISM survey that measures inflation, increased to 69.8. This suggests that input costs for manufacturers remain elevated, thereby keeping inflationary pressures on the radar of policymakers and market participants. The market’s reaction to this confluence of data was nuanced. While some risk assets experienced a rally, buoyed by strong earnings reports from major technology companies, the U.S. Treasury yield curve remains inverted. The persistent inversion, with the two-year Treasury yield trading below the Fed funds rate, continues to fuel expectations of potential monetary easing by the Federal Reserve in the coming months. Investors are weighing the possibility of rate cuts against the backdrop of persistent inflation and the potential impact of proposed trade policies on the economic outlook. The yield on the 10-year Treasury note is also being closely monitored as an indicator of long-term economic expectations.
