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USD/CHF Aims to Recover 0.9800 Ahead of US PMI and Swiss Retail Sales

By on August 31, 2022 0
  • USD/CHF is advancing towards 0.9800 despite weaker US jobs data.
  • The Fed has previously warned against easing the labor market in the face of soaring interest rates.
  • Swiss actual retail sales data is up 3.3% from 1.2%.

USD/CHF is gradually heading north after a firmer rebound from critical support near 0.9740. The asset is expected to return to monthly highs at 0.9800, with the US Dollar Index (DXY) showing stability on Wednesday despite weaker data on developments in Automatic Data Processing (ADP) employment in the States -United.

The DXY defended the crucial support at 108.40 after the release of the bearish US ADP employment data. With the US economy operating at full employment levels and the corporate sector announcing layoffs and dropping the hiring process on the earnings call for some time, dismal job additions were already expected.

The ADP employment change in the US landed at 132,000, below the consensus of 288,000. In addition, the Federal Reserve (Fed) warned that easing in the labor market would be the result of the rise interest rates. Therefore, the economic data had a manageable impact on the DXY.

Going forward, the US ISM manufacturing PMI will be of utmost importance. As higher interest rates have cut into market liquidity and the funds available for disposal are extremely low, economic activities in the United States are in sharp decline. The economic data is seen as lower at 52.0, down from the previous release of 52.8. Lower business sector investment also impacted employment data.

On the Swiss franc front, investors await actual retail sales data, which is estimated at 3.3%, significantly higher than the previous release of 1.2%. A decent improvement in economic data indicates an acceleration in aggregate demand.