USD/CHF struggles to gain ground around 0.8930, focus on Swiss, US data

• USD/CHF posts modest losses near 0.8930 amid the weaker USD.
• US Consumer Price Index (CPI) rose 0.6% MoM from 0.2% in July, the highest monthly gain in 14 months.
• Markets believe that interest rates will remain unchanged at next week’s FOMC meeting.
• Swiss Producer and Import Prices (Aug) will be due on Wednesday ahead of the US Initial Jobless Claims, Retail Sales data.

The USD/CHF pair snaps a two-day winning streak during the early Asian trading hours on Thursday. Meanwhile, the US Dollar Index (DXY), a measure of the value of USD against six other major currencies, hovers around 104.65 after retreating from 104.96 in response to the US inflation data. The pair currently trades near 0.8930, losing 0.10% on the day.

On Wednesday, the US Bureau of Labor Statistics showed that the headline inflation in August hit the highest monthly gain in 14 months with the US Consumer Price Index (CPI) rising 0.6% MoM from 0.2% in the previous reading. The annual figure came in at 3.7% from 3.2%, better than expected. The core CPI, which excludes volatile food and energy prices climbed 0.3% MoM from 0.2% in the previous month. The annual core CPI came in at 4.3% versus 4.7% prior.

The Greenback (USD) surged and later lost traction in response to the data as the markets believe that interest rates will remain unchanged at next week’s FOMC meeting. However, the figures imply that the Fed should be on the lookout for any re-acceleration in inflation in the next months. Investors have priced in 97% odds of interest rate unchanged in September at 5.25%-5.50%. However, the possibility of a rate hike in the November meeting increased to 49.2%, according to the CME Fedwatch Tool.

In the quiet week of economic data release from Switzerland, the risk sentiment and the USD dynamic will be the main driver for the USD/CHF pair. On Tuesday, US Commerce Secretary Gina Raimondo is set to meet with the CEOs of key American corporations this week, two weeks after visiting China and raising worries about business conditions, per Reuters. The renewed trade war tension between the US and China might exert some selling pressure on the USD and act as a headwind for the headwind for USD/CHF pair.

Looking ahead, market players will focus on the Swiss Producer and Import Prices for August due later on Thursday. Also, the release of the US weekly Initial Jobless Claims, the Producer Price Index (PPI), and monthly Retail Sales will remain in the spotlight. These figures could give a clear direction for the USD/CHF pair.