USD/CHF weakens as SNB reduces foreign currency reserves, trades near 0.8830

• USD/CHF retraces recent gains as SNB repatriates the Swiss Franc.
• SNB's currency reserves reduced to a seven-year low of CHF 657 billion as of October.
• Traders are cautious as recent US data raised the likelihood of further tightening by the Fed.

USD/CHF moves on a downward trajectory as the Swiss Franc (CHF) maintains its strength, driven by ongoing CHF repatriation by the Swiss National Bank (SNB). The USD/CHF pair retraces recent gains, trading lower around 0.8830 during the Asian session on Thursday.

The Swiss Franc receives upward support as the SNB has been gradually reducing its foreign currency reserves, which peaked at CHF 950 billion in 2022. The SNB's balance sheet of currency reserves has now reached a seven-year low of CHF 657 billion as of October.

However, the US dollar (USD) attempted to halt its slide against the CHF in the previous session after three days of declines. Traders seem to adopt a cautious stance in response to potential further tightening by the Federal Reserve (Fed) following the recent data from the United States (US), turning the market sentiment toward persistent inflation in the country, along with a slowing economy.

University of Michigan Consumer Sentiment Index for November posted a reading of 61.3, surpassing the projected 60.5 figure. However, US Durable Goods Orders in October fell by 5.4% against the anticipated 3.1%.US Jobless Claims data indicated a larger-than-anticipated decline for the week ending on November 17, dropping to 209K from 233K prior.

The Employment Level for Q3 will be released by the Swiss Statistics on Friday, which will show the total number of employed workers. The focus will shift toward the US preliminary S&P Global Manufacturing and Services PMI for November to gain further cues on the economic situation in the United States.