Anna 
UBS has advised investors to short the USD/CHF currency pair, citing attractive entry levels for the trade. The firm pointed to the decline of the DXY index, which tracks the US dollar’s strength against a basket of currencies, noting a 1.5% drop from its peak in late April due to lackluster US economic data.
Despite the Federal Reserve’s hawkish stance, with officials suggesting that it would take several months of moderating economic data before considering rate cuts, the US dollar faces conflicting pressures. On one hand, the Fed maintains a stringent approach to monetary policy. On the other, various economic indicators in the US are showing signs of weakening.
UBS emphasized the importance of a cautious and selective strategy when making directional trades with the dollar. This recommendation aligns with the current economic climate, where mixed signals are emerging from policymakers and economic data.
In addition to advising a short position on USD/CHF, UBS has also closed its long position on USD/CNY, achieving a marginal gain. This decision reflects UBS’s response to the evolving market conditions and their ongoing assessment of currency valuations.
The firm’s nuanced approach underscores the complexity of the current financial environment, where careful consideration is crucial for making informed investment decisions.
