USD/CHF sits near weekly tops, around 0.9300 mark ahead of NFP

• USD/CHF regained some positive traction on Friday and inched back closer to weekly tops.
• Hawkish Fed expectations, rallying US bond yields benefitted the USD and extended support.
• Investors now seemed reluctant from placing aggressive bets ahead of the key US jobs report.

The USD/CHF pair maintained its bid tone through the first half of the European session and was last seen hovering near the top end of its weekly trading range, around the 0.9300 mark.

Following the previous day's good two-way price moves, the USD/CHF pair regained positive traction on the last day of the week and was supported by a combination of factors. The US dollar continued drawing support by rallying US Treasury bond yields, bolstered by prospects for an early policy tightening by the Fed. Apart from this, the underlying bullish sentiment in the financial markets undermined the safe-haven Swiss franc and acted as a tailwind for the major.

The US bond yields have been scaling higher since late September when the Fed signalled that it would begin rolling back its massive pandemic-era stimulus by the end of 2021. The markets might have also started pricing in the possibility of an interest rate hike in 2022 amid worries that the recent surge in crude oil/energy prices will stoke inflation. Fears of a faster than expected rise in inflation further contributed to the ongoing strong move up in the yields.

Meanwhile, a temporary truce in the debt-ceiling standoff in the US Congress relieved concerns of a possible government debt default later this month and boosted investors' confidence. The Senate voted 50-48 to extend the debt ceiling until early December. The bill will now be sent to the House of Representatives for approval before President Joe Biden signs it. This, in turn, dented demand for traditional safe-haven assets and extended some support to the USD/CHF pair.

The fundamental backdrop seems tilted firmly in favour of bullish traders and supports prospects for additional gains. Investors, however, seemed reluctant, rather preferred to wait on the sidelines ahead of Friday's release of the closely-watched US monthly employment figures. The popularly known NFP could determine the Fed's next policy move, which, in turn, will influence the near-term USD price dyanmics and provide a fresh directional impetus to the USD/CHF pair.

Technical levels to watch