- USD/CHF retreats from intraday high, stays defensive after reversing from two-week top the previous day.
- Market sentiment turns sluggish as traders await US debt ceiling talks, Retail Sales data.
- Recently downbeat US data, mixed Fedspeak favor Swiss Franc buyers.
USD/CHF remains pressured near 0.8950 and prints minor losses while reversing from the intraday high during a two-day downtrend to early Tuesday. In doing so, the Swiss Franc (CHF) pair cheers the US Dollar’s downbeat performance amid the market’s cautious mood ahead of the key data and events.
That said, the US Dollar Index (DXY) drops to 102.40 as it defends the week-start pullback from the monthly high. With this, the greenback’s gauge versus six major currencies bears the burden of the softer US data and mixed Federal Reserve (Fed) commentary even as challenges to sentiment put a floor under the DXY.
Monday’s NY Empire State Manufacturing Index for May marked the biggest fall since April 2020, to -31.8 for May. The same joins the downbeat signals from the US inflation numbers flashed the last week, as well as justifying the Federal Reserve’s (Fed) dovish hike, to weigh on the US Dollar and the USD/CHF price.
However, the Fed policymakers remain mostly hawkish despite not suggesting more rate hikes, which in turn puts a floor under the USD/CHF. On Monday, the Federal Reserve (Fed) signals have been mostly upbeat as Atlanta Fed President Raphael Bostic told CNBC on Monday that there is still a long distance to go on inflation and added that they may have to “go up on rates,” as reported by Reuters. On the contrary, Chicago Federal Reserve Bank President Austan Goolsbee said in an interview with CNBC on Monday that a lot of impact of rate hikes is still in the pipeline. Furthermore, Minneapolis Fed President Neel Kashkari stated that signaled that the Fed has a long way to go to get inflation to 2.0%.
On a different page, the White House announced a meeting between President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy to overcome the looming US default. Ahead of the event, the US policymakers appear somewhat optimistic about extending the debt ceiling limit before the June expiry, which in turn weighed on the USD/CHF. However, the latest comments from United States House Speaker Kevin McCarthy saying, “I don’t think we’re in a good place,” seem to favor the US Dollar, via fears of deadlock on the US debt ceiling extension as Republicans may stick to their demand.
Amid these plays, S&P 500 Futures print mild losses even as Wall Street closed positive and the yields remain pressured, which in turn shows the market’s indecision and awaits the important data/events for clear directions.
Moving on, US Retail Sales for April, expected at 0.7% MoM versus -0.6% prior, will be the first to entertain USD/CHF traders ahead of the key US debt ceiling negotiations. Should the US policymakers offer a positive surprise to the markets, the odds of witnessing a slump in the US Dollar can’t be ruled out.
Despite reversing from a one-month-old descending resistance line, around 0.8985 by the press time, the USD/CHF pair’s short-term downside remains elusive unless it breaks the one-week-old rising support line, close to 0.8920 by the press time.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
The US Dollar (USD) failed to digest the intraday uptick against the Swiss Franc (CHF) near 0.8950 as investors remain hesitant ahead of the release of the US Retail Sales data, which is due later in the day, and debt ceiling negotiations looming in the near term.
At the time of writing, USD/CHF trading slightly below the 0.8950 mark at 0.8947, losing 0.24% on the day. The currency pair’s oscillation could be attributed to more-than-expected divergence in the US jobs report, nonfarm payrolls, which failed to defend the previous month’s unemployed rate of 8.4%.
The pair witnessed a run-up to 0.8956 as the US Dollar index, on Thursday, started to claw back some of the Washington driven losses. As the US Dollar index attempts to waver away from the downward graph, its support could be masked by the part of the economic optimism hingeing around the new US COVID-19 stimulus package which recently received a governing rubber stamp in the US Senate.
On the data sidelines, US Retail Sales are expected to record a rise of 1.5% in August, keeping the consumer spending undefeated to some extent, amid the pandemic uncertainty. Further, the new stimulus deal is likely to support consumer spending.
Later in the day, investors remain on the sidelines for fresh cues as top US officials resume talks for the upcoming debt ceiling. Last month, the US House of Representatives Speaker, Nacy Pelosi, along with Treasury Secretary Steven mnuchin agreed upon certain terms surrounding a coronavirus relief package, although the deal remained incomplete.
Although the parties are not expected to provide much of improvement, the conclusion of the talks may give USD/CHF some impetus for further advances. In the medium term, the USD/CHF pair remains vulnerable to the investors’ reaction on the talks outcome.