- The USD/CHF exchange rate is currently trending downward, lingering near its weekly nadir, as anxieties surrounding a potential recession and lackluster Chinese Purchasing Managers’ Index (PMI) data dampen overall market sentiment.
- The United States’ Gross Domestic Product (GDP) experienced a contraction in the first quarter, while Personal Consumption Expenditures (PCE) inflation exhibited a cooling trend. Traders are now reassessing the Federal Reserve’s future policy decisions amidst renewed criticism of Chairman Powell by former President Trump.
- Technical indicators continue to suggest a bearish outlook for the USD/CHF, with the currency pair facing resistance from key moving averages and exhibiting downside risks toward the 0.8120 and 0.8070 levels.
The USD/CHF is currently trading lower, remaining in close proximity to its recent lows following a series of disappointing economic data releases from the United States and concerning macroeconomic signals emanating from China. These factors have collectively triggered a broad risk-off sentiment across global financial markets. Market sentiment was already fragile leading into Wednesday’s trading session, and the subsequent release of a weaker-than-expected US GDP figure further amplified concerns regarding the underlying health of the US economy. Concurrently, weak Chinese manufacturing and services PMIs have revealed the initial discernible signs of economic strain resulting from the escalating trade tensions, thereby heightening fears of a global economic slowdown. The US Dollar is facing broad-based selling pressure, struggling to establish any upward momentum despite typical month-end portfolio rebalancing flows.
On the macroeconomic front, US GDP contracted by 0.3% in the first quarter of 2025, representing a significant reversal from the 2.4% growth rate recorded in the fourth quarter of 2024 and falling considerably short of consensus market expectations. This economic downturn was primarily attributable to weaker consumer spending patterns, a reduction in government expenditure, and a widening trade deficit. Concurrently, core PCE inflation registered at 2.3% year-on-year, a decrease from February’s 2.5%, aligning with market forecasts but continuing the established trend of moderating price pressures. Personal income and spending figures exhibited modest upside surprises, but these positive data points failed to provide substantial support for the US Dollar. Former President Trump’s renewed criticism of Federal Reserve Chairman Powell during a rally in Detroit further contributed to market uncertainty. Trump asserted that he possesses superior knowledge of interest rates compared to Powell and advocated for a more aggressive monetary easing policy.
Adding to the prevailing bearish sentiment, China’s April manufacturing PMI experienced a sharp decline to 49.0, marking its lowest level since 2023, while the export component plummeted to 44.7. Non-manufacturing activity also exhibited a slowdown, with readings for services and construction sectors edging closer to stagnation levels. This data corroborated the presence of a significant export shock and increased the probability of additional stimulus measures being implemented by the Chinese government in Beijing. Market participants responded swiftly, selling USD across the board, while demand for traditional safe-haven assets, such as the Swiss Franc, experienced a corresponding increase. Furthermore, Chinese gold ETFs witnessed their largest outflows in 264 trading sessions, and copper prices experienced a sharp decline as Commodity Trading Advisor (CTA)-driven liquidations intensified amidst thin liquidity conditions ahead of upcoming holidays in Asia. The price of WTI crude oil also declined, reflecting concerns about weakening global demand.
