USD/CHF continues its losing streak on subdued US Dollar, stretches lower to near 0.8560

• USD/CHF extends its losses as the US Dollar loses ground on subdued US yields.
• Swiss Manufacturing PMI improved to 43.1 but fell short of the expected 44.5.
• US Treasury yields face challenges as the regional bank New York Community Bancorp is stressed in its commercial real estate portfolio.

USD/CHF loses ground for the third consecutive session, edging lower to near 0.8560 during the European trading hours on Friday. The downbeat labor data from the United States (US) weakened the US Dollar (USD), which in turn, acted as a headwind for the USD/CHF pair.

The Swiss Manufacturing Purchasing Managers Index (PMI) released by the Trade Association for Purchasing and Supply Management showed that production growth in Switzerland has slightly improved but failed to meet the market expectations. The index improved to 43.1 in January from the previous reading of 43.0, falling short of the expected 44.5 reading.

Recent economic events indicated a decline in Swiss Real Retail Sales and Consumer Demand, contrasting with a rise in Gross Domestic Product that exceeded market consensus. Looking ahead, projections for this year suggest that inflation will average below the 2% threshold. The consensus expectation is for the Swiss National Bank (SNB) to implement its first rate cut in September 2024.

The subdued US Treasury yields are adding pressure on the US Dollar (USD). The downward pressure on US Treasury yields followed reports from regional bank New York Community Bancorp, revealing increased stress in its commercial real estate portfolio.

Furthermore, the US Dollar (USD) faced downward pressure following the release of mixed economic data from the United States (US) on Thursday. Initial Jobless Claims for the week ending on January 26 increased to 224K, surpassing both the previous rise of 215K and the expected figure of 212K.

However, the ISM Manufacturing PMI improved, climbing to 49.1 from the prior reading of 47.1, surpassing the anticipated figure of 47.0 in January. More labor data, including US Average Hourly Earnings and Nonfarm Payrolls (NFP), is scheduled for release on Friday.