USD/CHF drops below 0.9700 as markets remain risk-averse

• Confirmed cases of coronavirus infection in China approach 10,000.
• 10-year US Treasury bond yield drops more than 1% on Friday.
• US Dollar Index consolidates losses below 98 ahead of inflation data.

The USD/CHF pair erased nearly 40 pips on Thursday and seems to be having a difficult time staging a recovery on Friday. After touching a daily high of 0.9715, the pair lost its traction and was last seen trading at 0.9693, where it was virtually unchanged on a daily basis.

CHF capitalizes on risk-off flows

The lack of positive developments surrounding the coronavirus outbreak keeps investors on edge amid concerns over its potential negative impact on the global economy. China's envoy to the UN, Zhang Jun, on Friday reported that the total number of confirmed coronavirus cases in China rose to 9.809 with a death toll of 213.

The 10-year US Treasury bond yield is down 1.5% on the day and major European equity indexes are registering losses on Friday to reflect the risk-averse market environment.

In the second half of the day, the US Bureau of Economic Analysis (BEA) will publish the Personal Consumption Expenditures (PCE) Price Index data. Investors expect the annual core PCE Price Index, the Federal Reserve's preferred gauge of inflation, to stay unchanged at 1.6% in December. The BEA's report will include the Personal Income and Personal Spending figures as well.

Technical levels to watch for