- A combination of factors pushed USD / CHF higher for the second day in a row on Monday.
- Risky appetite weighs on safe-haven CHF and remains supportive amid stronger USD.
- The market focus is now on the release this week of the US CPI report and retail sales figures.
The USD / CHF pair continues to move higher during Monday’s European session, soaring to new daily highs around the 0.9220 region.
A combination of supporting factors has helped the USD / CHF pair gain strong positive traction on the first day of a new trading week and take advantage of Friday’s modest rebound from the 0.9150 region. The boost from risk appetite, as evidenced by a generally positive tone around equity markets, has weighed on demand for the safe-haven Swiss franc. This, coupled with sustained interest in buying the US dollar, has provided an additional boost to USD / CHF for the second day in a row.
The dollar remains well supported by firm market expectations that the Fed will begin reversing its pandemic-era stimulus sooner rather than later. The speculation was further fueled by comments from Philadelphia Fed Chairman Patrick Harker on Monday, who joined a chorus of authorities eager to cut $ 120 billion in monthly bond purchases. This, coupled with the recent rally in US Treasury yields, has acted as a tailwind for the USD.
The yield on the US 10-year government bond rose again near the 1.35% level on Friday following the release of the US IPP producer price index. The PPI posted the largest gain since November 2010 and indicated that higher inflation could persist for some time. Therefore, the focus is now on the latest US CPI consumer inflation report on Tuesday. Apart from this, investors will also turn their attention this week to the monthly US retail sales figures.
The data will play a key role in influencing market expectations of the Fed’s next monetary policy move and propelling the dollar ahead of the crucial FOMC monetary policy meeting on Sept. 20-21. Meanwhile, broader market risk sentiment could generate some trading opportunities around the USD / CHF pair in the absence of any relevant economic data releases on Monday.
Technical levels to observe
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