USD/CHF edges higher above 0.9150, focus on US ADP, FOMC Minutes

• USD/CHF remains sidelined after declining the most in two weeks.
• Tepid risk appetite, cautious mood ahead of the key US data/events challenge momentum.
• Updates concerning Omicron, China’s Evergrande may entertain intraday traders ahead of the key US session.

USD/CHF treads water around 0.9165, recently bounced off the intraday low amid Wednesday’s Asian session. The Swiss currency (CHF) pair dropped the most in a fortnight the previous day while consolidating the early week’s heavy gains.

That being said, recently softer Treasury yields and mixed concerns over the South African covid variant, namely Omicron, seem to challenge the USD/CHF pair traders, not to forget cautious mood ahead of the US ADP Employment Change for December and FOMC Minutes.

World Health Organization (WHO) WHO Incident Manager Abdi Mahamud cites fresh clues to placate Omicron fears but the recent rally in infections challenges the national medical systems in multiple nations.

It’s worth noting that a jump in the global vaccinations keeps policymakers hopeful of overcoming the pandemic, which in turn favored market sentiment the previous day.

Also, mixed data from the US and a pause in the bullish inflation expectations joined comments from the Fed policymaker to confuse the market players.

Talking about data, the ISM Manufacturing PMI dropped to the lowest in 11 months in December, 58.7 versus 60.0 forecast and 61.1 prior, whereas November’s JOLTS Jobs Openings came in lower than the upwardly revised previous reading of 11.091M to 10.562M.

Moving on, the US inflation expectations, as per 10-Year Breakeven Inflation Rate numbers from the Federal Reserve Bank of St. Louis (FRED) eased from a six-week high to 2.57% at the latest, which in turn tamed Fed rate-hike chatters.

Also, Minneapolis Fed President and 2022 voting FOMC member Neil Kashkari, who surprised markets with this hawkish hopes of two rate lifts in 2022 still fall short of the money market bets favoring three such actions, which in turn weigh on the sentiment.

Elsewhere, fresh fears concerning China’s troubled real-estate player Evergrande also weigh on the market sentiment and the USD/CHF prices.

Against this backdrop, the US Treasury yields struggle to extend the previous run-up while taking rounds to the six-week high flashed on Tuesday whereas the US stock futures print mild losses by the press time.

Looking forward, USD/CHF traders will pay attention to the Omicron and China headlines before the US data docket gets active. While the anticipated easing in the ADP may help the Aussie pair to keep the latest rebound, the hawkish tone of the policymakers in the Federal Open Market Committee (FOMC) Meeting Minutes will be enough to keep the quote weak. 

Read: US ADP December Preview: Suddenly its inflation, not jobs

Technical analysis

USD/CHF remains confined between 20-DMA and a five-month-old support line, respectively around 0.9195 and 0.9135. However, bearish MACD signals and descending RSI line keep sellers hopeful.