USD/CHF declines towards 0.9840 as DXY’s pre-event consolidation explodes

• USD/CHF has dropped to near 0.9850 as DXY has refreshed day’s low at 109.54.
• The risk-on impulse has rebounded as S&P500 futures have recovered majority of Wednesday’s losses.
• US economic calendar is full of critical events and will provide guidance for further action.

The USD/CHF pair has dropped after failing to surpass the immediate hurdle of 0.9870 in the early European session. An explosion of pre-event consolidation in the US dollar index (DXY) has weighed pressure on the major.

The DXY has refreshed its day’s low at 109.54 and is expected to remain on the tenterhooks as the risk appetite of the market participants has improved vigorously. S&P500 futures have recovered a majority of Wednesday’s losses as the corrective move has terminated and investors are pumping money into risk-sensitive assets.

Meanwhile, the 10-year US Treasury yields have turned subdued as investors await the release of critical economic data from the US economy. Starting the US Gross Domestic Product (GDP) data, which is expected to accelerate by a growth rate of 2.4% would provide a decisive movement in the DXY.

The US economic calendar is also offering the Durable Goods Orders data, which is expected to improve by 0.6% against a drop of 0.2%. Now, it seems clear why the core Consumer Price Index (CPI) is not displaying evidence of exhaustion.

Apart from the GDP and Durable Goods Orders data, investors will also focus on the core Personal Consumption Expenditure (PCE) data. The inflation tool is seen lower at 4.5% vs. the former figure of 4.7%.

On the Swiss franc front, chatters over the collaboration of the European Union, the UK, and Switzerland to combat soaring energy bills will remain in focus. The EU is planning a price cap on energy prices to delight households against soaring energy bills. The strategy is to be executed without boosting demand or delivery of electricity to foreign consumers at subsidized prices.

In response to that, the Trading bloc’s executive arm is advising EU members that such a price limit would have to be extended to power-importing countries like the UK or Switzerland for it to be effective, reported Bloomberg.