USD/CHF moves below 0.8700 on the subdued Greenback amid downbeat US bond yields

• USD/CHF trades lower as the US Dollar Index moves below 102.50.
• Downbeat US Treasury yields contributed to the downward pressure on the Greenback.
• SNB Chairman Thomas Jordan’s hawkish remarks might have supported the Swiss Franc.

USD/CHF retraces the recent gains on the subdued US Dollar (USD), which could be attributed to the lowered US Treasury yields. The USD/CHF pair trades lower around 0.8690 during the Asian hours on Monday, with 2-year and 10-year yields on US bond coupons standing lower at 4.41% and 3.91%, respectively.

The US Dollar Index (DXY) experienced gains in the previous session, trading lower around 102.50, by the press time. The dovish comments from Federal Reserve’s (Fed) members reinforced the challenges for the US Dollar. Atlanta Fed President Raphael Bostic commented on the possibility of an interest rate cut in the third quarter of 2024 and Chicago Fed President Austan Goolsbee has left open the possibility of a rate cut at the Federal Reserve’s meeting next March.

On the other side, the Swiss Franc (CHF) faced a challenge as the Swiss National Bank (SNB) opted to keep interest rates unchanged for the second consecutive rate call, aligning with widespread expectations. The decision was influenced by a downward trend in domestic inflation and a projected slowdown in Swiss Gross Domestic Product (GDP) growth.

Swiss National Bank (SNB) Chairman Thomas Jordan has remarked that inflationary pressures have slightly decreased, emphasizing the persistent high level of uncertainty. He noted the expectation for inflation to rise in the coming months and highlighted that Swiss inflation forecasts remain within the 0-2% target range through 2025.

Additionally, Chairman Jordan mentioned a shift in focus, stating, “We are no longer focusing on forex sales,” and affirmed the commitment to adjust monetary policy if necessary to maintain the goal of price stability.

Investor attention will focus on the Swiss Trade Balance data for November, along with Consumer Confidence and Existing Home Sales Change from the United States on Wednesday.