USD/CHF Holds Above 0.8900, Focus on US Economic Data

USD/CHF Holds Above 0.8900, Focus on US Economic Data

The USD to CHF continues its upward trend, hovering near 0.8915 during the early Asian session, bolstered by encouraging US economic data. Meanwhile, the US Dollar Index (DXY) sees slight consolidation after reaching a six-month high.

Federal Reserve (Fed) officials weigh in on interest rates, with Governor Christopher Waller emphasizing data-driven decisions, while Fed Boston President Susan Collins advocates for a cautious approach.

Positive US ISM Services PMI Data

The Institute for Supply Management (ISM) reports a significant rise in US ISM Services PMI, reaching 54.5 in August, surpassing the previous month’s 52.7 and exceeding market consensus. This marks the highest reading since February. Conversely, the S&P Global Composite’s final figures see a minor decline.

Extension of China’s Tariff Exemptions

The US Trade Representative extends tariff exemptions on 352 Chinese imports and 77 COVID-19-related categories until December 31, providing more time for review. However, this move may introduce potential trade tensions, benefiting the traditionally safe-haven CHF and potentially impeding USD/CHF.

Swiss Economic Data Impact on CHF Exchange Rate

The CHF experiences downward pressure due to lacklustre Swiss economic data. The nation’s GDP for Q2 remains stagnant, falling short of market consensus. The annual growth figure aligns with expectations, as reported by Swiss Statistics.

Upcoming Focus: US Jobless Claims and Labor Costs

Later this week, attention will shift to US weekly Initial Jobless Claims and Unit Labor Costs for Q2. These figures are anticipated to guide the trajectory of the USD/CHF pair. Absent significant releases from Switzerland, USD dynamics will primarily influence the pair’s movement.

USD to CHF Technical Outlook

The USD to CHF is testing the indicator’s signal lines, signalling a potential uptrend. The instrument’s movement above the Ichimoku Cloud supports this. Further advancement towards 0.8905 is projected, with a subsequent rise to 0.8985. A confirming factor would be a rebound from the lower boundary of the bullish channel. A breakout below 0.8855 could invalidate this scenario, implying a potential decline to 0.8665. Additionally, growth could be validated by breaching the upper boundary of the descending channel with the price securing above 0.8935.