USD/CHF roils five-day uptrend to drop towards 0.9300 on covid fears, Swiss GDP eyed

• USD/CHF consolidates weekly gains, drops the most in six days.
• Virus woes spread on concerns over South African variant, WHO calls for special meeting.
• Fears of Fed’s rate hike at the wrong time adds to the risk-off mood.
• Swiss Q3 GDP eyed for fresh impulse but risk catalysts are the key.

USD/CHF stays pressured around intraday low after snapping the five-day advances during early Asian session on Friday. That said, the quote registers the most daily losses in over a week while posting 0.9330 as a quote, down 0.27% on a day.

The risk barometer pair justifies the Swiss currency’s (CHF) safe-haven status on sour sentiment due to the coronavirus fears ahead of the key Swiss Q3 GDP data.

The covid-19 woes spread outside the initial fear-zone of Europe on concerns relating to the variant, with a formal name of B.1.1.529, which is linked to South Africa and is immune to the vaccines. For the same, the World Health Organization (WHO) has called for a special meeting on Friday and may announce it as the variant of concern.

Additionally weighing the risk appetite are the chatters that the Fed’s much-lauded monetary policy tightening will be at the wrong time.

Amid these plays, the US 10-year Treasury yields drop eight basis points (bps) to 1.565%, extending Wednesday’s pullback from the monthly peak. Additionally portraying the risk aversion are the downbeat prints of the S&P 500 Futures, -0.80% intraday, as well as the Asia-Pacific stocks.

While the virus updates are important for near-term USD/CHF moves, Q3 Swiss GDP will also direct the pair traders. Forecasts suggest the growth number will rise from 1.8% prior to 2.0% QoQ on a seasonally adjusted basis. However, the YoY print is likely easing from 7.7% to 3.2%.

Other than that, the US traders’ return from the Thanksgiving Day holiday and the yields are also important to watch for clear direction.

Technical analysis

A clear downside break of a 12-day-old ascending trend line directs USD/CHF bears to 10-DMA level surrounding the 0.9300 threshold.