- USD/CHF weakens ahead of Tuesday’s Swiss Consumer Price Index.
- Markets expect Swiss CPI to grow 1.8% versus previous figures of 1.6%.
- The Fed’s hawkish stance on the path of interest rates strengthens the US Dollar (USD).
- Rising US Treasury yields contribute to support for the Dollar.
USD/CHF continues to move lower, trading around 0.9120 during the early hours of the European session on Monday. The pair is experiencing bearish pressure due to stronger-than-expected economic data from Switzerland.
Swiss real retail sales data revealed a smaller decline in Swiss consumer demand in August. A 1.8% contraction was reported, as expected, compared to the previous decline of 2.5%.
Data on the Swiss Consumer Price Index (CPI) will be published on Tuesday, which is expected to grow 1.8% compared to 1.6% previously. This event can potentially influence market dynamics and impact movements in the Swiss Franc.
Additionally, over the weekend, Chinese manufacturing PMI data showed an improvement into positive territory, which could impact the strength of the Dollar. This development could have provided support for the Swiss Franc (CHF) as it is considered a safe haven currency.
China’s August manufacturing PMI rose to 50.2 from 49.7 previously, beating the expected 50.0. Additionally, the Non-Manufacturing PMI rose to 51.7 from the previous reading of 51.0, beating the market consensus of 51.5.
However, the Fed is expected to make another 25 basis point (bp) rate hike before the end of the year. Additionally, the market is factoring in the likelihood of interest rates rising for an extended period, which could provide support to support the US Dollar (USD).
The DXY Dollar Index remains around 106.20 at the time of writing. The US Dollar (USD) strengthened following the release of subdued economic data on Friday. The Michigan Consumer Sentiment Index for September improved to 68.1 from the previous figure of 67.7, exceeding market expectations.
The US Core Personal Consumption Expenditure (PCE) price index for August rose on estimates to 3.9%, showing a slight moderation from the previous reading of 4.3%. Core PCE (mom) recorded a softer reading of 0.1%, compared to the market consensus for it to remain at the previous 0.2%.
On the other hand, the positive evolution of US Treasury yields provides greater support to the Dollar. The yield on the 10-year US Treasury Bond is currently at 4.61%, up 0.96% on the day.
After Friday’s session, the bill to avoid a government shutdown was successfully passed in the US, securing funds until November 17. This positive development has renewed the bullish trajectory of the DXY Dollar Index.
Avoiding a government shutdown usually contributes to the stability of financial markets, and the resumption of the DXY index’s upward movement suggests greater confidence in the US dollar among investors.
Traders will likely pay close attention to the upcoming US ISM Manufacturing PMI for September ahead of Fed Chair Jerome Powell’s speech on Monday.
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.
