USD/CHF rebounds from intraday lows near 0.9000 on surging US Treasury yields

• USD/CHF receives upward support despite stronger Switzerland’s Trade Balance data.
• Swiss balance of trade increased from 3,814M to 6,316M in September.
• Higher US bond yields contribute support to underpinning the US Dollar.

USD/CHF recovers the intraday losses on surging US Treasury yields, trading higher around 0.9000 during the early European session on Thursday. However, the pair faced a challenge on solid Swiss Trade Balance data released on Thursday.

Federal Customs Administration of Switzerland reported a positive value for the balance amount between import and export, increasing from the previous balance of 3,814M to 6,316M in September. The market expected figure was 3,770M.

Additionally, the escalating geopolitical tension in the Middle East has the potential to increase demand for traditional safe-haven assets like the Swiss Franc (CHF). On Tuesday, conflicting reports emerged about an Israeli air attack that Gaza authorities claimed killed 500 people at a hospital in Palestinian territory. Israel countered, asserting that the damage was caused by a Palestinian attack.

In response to the humanitarian crisis resulting from the Israel-Hamas conflict, US President Joe Biden has reached an agreement with Egypt to provide limited aid to Gaza. This complex situation is undoubtedly influencing financial considerations.

US Dollar Index (DXY) experienced a resurgence, influenced by both economic data from the United States and US Treasury yields. The spot price hovers around 106.60. The 10-year US bond yield climbed to 4.97%, up by 1.18%, by the press time.

However, dovish remarks from multiple Federal Reserve officials suggest a cautious stance, with reluctance to tighten monetary policy in the current economic scenario.

The US housing market is providing mixed signals, with Building Permits in September surpassing expectations at 1.475 million (above the expected 1.45 million). Housing Starts rebounded to 1.35 million, just below the market consensus of 1.38 million, adding complexity to the narrative.

The Beige Book's observation, indicating "little to no change" in economic activity during September and early October, offers a broader perspective.

Thursday could bring the energy of a significant infusion of economic insights into the US economy, featuring Existing Home Sales, the Philly Fed index, and the weekly Jobless Claims report.