USD/CHF recovers a part of heavy intraday losses, keeps the red below 0.9300
- USD/CHF attracts some dip-buying near the 0.9230 area and trims a part of its intraday losses.
- Fears of turmoil in the banking sector lend support to the pair amid a modest USD rebound.
- The risk-off mood could underpin the safe-haven CHF and keep a lid on any meaningful upside.
The USD/CHF pair recovers over 50 pips from the daily low and now trades just below the 0.9300 mark during the early North American session, still down around 0.45% for the day.
The Swiss Franc initially reacted positively and forced the USD/CHF pair to reverse a part of the previous day's huge rally after Credit Suisse announced that it will exercise an option to borrow up to $54 billion from the Swiss National Bank (SNB) to shore up liquidity. The early optimism, however, fades rather quickly as the markets are still trying to determine whether fears of a systemic crisis have been tamed.
Apart from this, a modest US Dollar recovery from the daily low, supported by the mostly upbeat US macro data, assists the USD/CHF pair to attract some buying near the 0.9230-0.9225 region. The US Department of Labor reported that Initial Jobless Claims fell to 192K during the week ended March 10 from 212K previous. Adding to this, the US housing market data also surpassed market estimates.
This, to a larger extent, helps offset the disappointing release of the Philly Fed Manufacturing Index, which came in at -23.2 for the current month against expectations for an improvement to -14.5 from the -24.3 previous. This, along with expectations that the Federal Reserve will deliver at least a 25 bps rate hike next week, acts as a tailwind for the Greenback and lends some support to the USD/CHF pair.
That said, the prevalent risk-off environment - as depicted by an extended downfall in the equity markets - could underpin the safe-haven CHF and keep a lid on any meaningful upside for the USD/CHF pair, at least for the time being. Hence, it will be prudent to wait for strong follow-through buying before positioning for an extension of this week's solid rebound from the lowest level since early January.
Technical levels to watch