The USD/CHF pair drifts lower toward the 0.7910 area during Tuesday’s Asian session, extending modest losses as the US Dollar remains under pressure following Monday’s pullback. The pair reflects mild selling interest as the Greenback loses momentum after a brief safe-haven driven advance.
US dollar loses traction after brief safe-haven boost
At the time of writing, the US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is down around 0.12% near 98.20.
On Monday, the index touched a fresh three-week high at 98.86 amid a temporary surge in safe-haven demand after Washington announced the capture of Venezuelan President Nicolas Maduro on drug-trafficking charges. However, the rally proved short-lived as investors refocused on weakening domestic fundamentals.
Weak manufacturing data weighs on sentiment
The US Dollar has come under renewed pressure following disappointing macroeconomic signals. The ISM Manufacturing PMI released on Monday confirmed that factory activity remained in contraction territory, with the index falling to 47.9 in December from 48.2 previously. The data reinforced concerns about the health of the US industrial sector and limited the Dollar’s upside.
Markets brace for key US labor market data
Attention now turns to the US labor market, with volatility expected to increase ahead of Friday’s Nonfarm Payrolls (NFP) report. The employment figures are seen as critical for shaping expectations around the Federal Reserve’s monetary policy outlook, particularly as several Fed officials have highlighted rising downside risks to the labor market. Ahead of the NFP release, traders will closely watch Wednesday’s ADP Employment Change, ISM Services PMI for December, and the JOLTS Job Openings report for November.
Swiss franc steady ahead of inflation data
On the other side of the pair, the Swiss Franc trades in a relatively calm manner as markets await Switzerland’s Consumer Price Index (CPI) data for December, due on Thursday. The inflation figures are expected to play a key role in shaping expectations for the Swiss National Bank’s next policy steps, keeping CHF traders cautious in the near term.
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