- Mixed US Non-Farm Payrolls data did not initially support the Dollar, but the ISM Manufacturing PMI lifted sentiment.
- Swiss inflation is above estimates, but weak retail sales could deter the SNB from tightening monetary policy.
- The upcoming Federal Reserve meeting on September 14 could be key for the pair.
He Swiss Franc (CHF) lost traction in front of US dollar (USD) in the middle of the session on Friday in New York, after a series of economic data from the United States (US) strengthened the USD. The USD/CHF pair fell towards a daily low of 0.8795 before resuming its latest three-day uptrend and is trading around 0.8850, 0.28% above its opening price.
Swiss Franc Losing Ground as Improved US Business Activity and Bond Yields Support Dollar
Financial markets remain calm after a very busy week on the US economic calendar. The August Non-Farm Payrolls numbers were mixed, as the US economy added 187,000 jobs, above estimates of 177,000, which surprisingly didn’t make a dent in the Dollar, as the unemployment rate increased by 3.8 % YoY, above forecasts of 3.5%. The dollar’s weakness came as investors speculated that the Fed would not tighten monetary conditions in September, while reducing bets that the US central bank would do so in November.
However, USD/CHF sellers were caught off guard as the ISM Manufacturing PMI improved to 47.6 from 46.4 in July and beat expectations of 47. Most of the report’s sub-components strengthened, painting a brighter outlook. positive for business activity in the US.
Another reason supporting the dollar was the recovery in US bond yields, which pushed the US Dollar Index (DXY) above the 104,000 mark, a tailwind for the USD/CHF pair.
In Switzerland, inflation rose 1.6%, beating estimates of 1.5%, and was unchanged from July’s figures. Although the data bolsters the chances of further tightening by the Swiss National Bank (SNB), a worse-than-expected retail sales report in July could discourage the central bank from tightening monetary policy. Traders should be aware that the current SNB interest rate sits at 1.75%, and the chances of it remaining unchanged hover over 70%.
Given the background, USD/CHF could resume its uptrend and test 0.9000, but the upcoming US Federal Reserve meeting on September 14 may change the outlook before the Fed decision.
USD/CHF Price Analysis: Technical Perspective
The USD/CHF daily chart shows the pair entering a consolidation phase, albeit one that is trending higher, once buyers recaptured the 50-day moving average (DMA) at 0.8782. Furthermore, the major pairs have crossed above a bearish resistance trend line drawn from the March 2023 highs, a relevant five-month old trend line, which, once broken, the pair would have a direct path to try 0.9000. A break of the latter would expose the confluence of a previous support-turned-resistance trend line and the 200 DMA around 0.9040/65 before buyers set their sights on the May 31 high of 0.9147. Conversely, downside risks emerge below the current week’s low of 0.8744.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
