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USD/CHF pares intraday gains at 1.5-month high, probes five-day uptrend.
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Swiss Consumer Price Index rose 0.3% MoM, 3.5% YoY in July, Real Retail Sales fell 2.6% YoY in July.
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Risk-off mood, hawkish Fed bets keep DXY on the front foot.
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US ISM Manufacturing PMI, NFP will be crucial for clear directions.
USD/CHF renews intraday low near 0.9765 after a surprise positive Swiss statistics during the early Thursday morning on Thursday. In doing so, the Swiss currency (CHF) pair probes a four-day uptrend near the highest levels since July 15.
Swiss Consumer Price Index (CPI) grew by 0.3% MoM and 3.5% YoY versus 0.2% and 3.4% expected respectively for August. That said, the nation’s Real Retail Sales for July eased below 3.3% expected to 2.6% while crossing the downwardly revised 0.7% prior.
Nevertheless, risk-averse sentiment and firm Treasury yields depend on the US dollar. That said, the US Dollar Index (DXY) recently printed its biggest daily gain in a week when it picked a bid near 109.10. In doing so, the greenback’s gauge against six major currencies ignored the softer US ADP employment change which rose 132K to 288K vs. 270K previously expected. The reason can be attributed to average wage growth in August which was up 7.6% y/y and is what has kept Fed policymakers hungry.
Hawkish Fedspeak could be held responsible for the latest increase in the market’s bets of a 0.75% Fed rate hike in September, which in turn keeps the USD/CHF on a firmer footing. The CME’s FedWatch Tool portrays a 74.0% chance of a 75 basis points Fed rate hike in September, versus 73.0% the previous day.
The grim covid conditions in China and the Sino-American tussles over Taiwan appear to exert more downside pressure on the sentiment, while also favoring the USD/CHF bulls.
Amid these plays, US 10-year Treasury yields refresh a two-month high of around 3.21% while the two-year bond coupons jump to the highest levels since 2007, near 3.20% and 3.50% respectively at the latest. Also portraying the sour sentiment is the S&P 500 Futures’ 0.56% intraday fall to the lowest levels since late July, at 3,930 by the press time.
Given the risk-off mood and firmer US dollar-driven USD/CHF run-up, the pair’s further advances hinge on the US ISM Manufacturing PMI for August, expected 52.8 versus 52.0 prior, ahead of Friday’s US Nonfarm Payrolls (NFP).
Technical analysis
The overbought RSI conditions join the upper line of the three-week-long bullish channel, near 0.9820, to challenge the USD/CHF buyers. Alternatively, the pullback moves may initially test the 50% Fibonacci retracement level of 0.9715 before highlighting the 100-DMA support near 0.9680-75.
ADDITIONAL IMPORTANT LEVELS
