USD/CHF extends downside to 0.8950 amid correction in USD Index

• USD/CHF has stretched its downside to near 0.8950 amid a lack of conviction in the USD Index for a recovery.
• Investors are taking caution ahead of the second quarterly result season in the United States for the financial year 2023.
• Scrutiny of Tuesday’s US Durables preliminary report indicates that fewer defense orders are going to impact the economic data.

The USD/CHF pair has dropped further to near 0.8950 in the European session. The Swiss Franc asset has faced an immense sell-off amid weakness in the US Dollar Index (DXY). The USD Index has turned sideways after correcting from 103.16 as investors have started digesting the consequences of higher interest rates from the global central banks.

S&P500 futures are holding nominal losses in London, portraying a risk-off mood, as investors are taking caution ahead of the second quarterly result season in the United States for the financial year 2023. Investors are expecting weak numbers from banking stocks due to tight credit conditions and weak guidance from technology stocks amid a high-interest rate environment.

The USD Index is oscillating in a narrow range of around 102.76 after a corrective move. Sheer volatility is anticipated after the release of the US Durable Goods Orders data (May). As per the consensus, the economic data is seen contracting by 1.0% vs. an expansion of 1.1%. Durable Goods Orders excluding defense are seen as stagnant against a contraction of 0.7%.

Scrutiny of the forward economic data indicates that fewer defense orders are going to impact the economic indicator.

On the Swiss Franc front, the Swiss National Bank raised interest rates by 25 basis points (bps) last week to 1.75% in order to keep inflation restricted below or around 2%. SNB Chairman Thomas J. Jordan believes that the consequences of an inflated environment are higher than a nation with low inflation. SNB Jordan kept doors open for more interest rate hikes.