USD/CHF is trading with losses, holding near recent lows after a wave of weak US data and worsening macro signals from China triggered broad risk-off flows in the market. Sentiment was already fragile heading into Wednesday, and the release of disappointing US GDP data raised concerns over the health of the US economy. At the same time, weak Chinese manufacturing and services PMIs revealed the first clear signs of stress from the escalating trade war, raising fears of a global economic slowdown. The US dollar was broadly under pressure, struggling to gain any momentum despite the month-end flows.

On the macro front, US GDP contracted by 0.3% in the first quarter of 2025, a sharp reversal from the 2.4% growth seen in Q4 2024 and well below market expectations. The decline reflected weaker consumer spending, falling government spending, and a widening trade deficit. Meanwhile, core PCE inflation came in at 2.3% year-on-year, down from 2.5% in February, in line with consensus but continuing the downward trend in price pressures. Personal income and spending surprised slightly to the upside, but failed to support the dollar. President Trump's renewed attacks on Fed Chair Powell, during a rally in Detroit, added fuel to market uncertainty, as the President claimed to "know more about interest rates than Powell" and pushed for more aggressive easing.

Exacerbating the bearish bias, China's April manufacturing PMI fell sharply to 49.0, the lowest level since 2023, and the export component fell to 44.7. Non-manufacturing activity also slowed, with services and construction readings edging closer to stagnation. This confirmed a severe export shock and raised the possibility of additional stimulus measures from Beijing. Traders reacted quickly, selling the USD across the board while demand for traditional safe havens such as the Swiss Franc strengthened. Meanwhile, China gold ETFs saw their biggest outflows in 264 sessions, and Copper prices plunged as CTA-driven liquidations escalated into thin liquidity ahead of the Asian holiday. (Newsmaker23)

Source: Fxstreet