USD/CHF bulls struggle above 0.9600, Swiss Unemployment, US inflation eyed

USD/CHF remains sidelined around 0.9625-20, struggling to extend Friday’s gains amid a quiet start to the week, as the pair traders await Swiss Unemployment Rate data for July. It’s worth noting that the firmer US employment report for July and the US-China tension appears to have favored the US dollar’s demand before the latest inaction ahead of the key data from Switzerland.

USD/CHF seems to portray a cautious mood ahead of the Swiss Unemployment Rate for July. Also likely to have challenged the pair bulls is the anxiety ahead of Wednesday’s US Consumer Price Index (CPI) for July.

Also likely to have probed the USD/CHF bulls could be the latest trade numbers from China. That said, China’s trade numbers for June marked upbeat results with the Exports rising the most in the year. That said, the headline Trade Balance rose to $101.26B versus $90B forecasts and $97.94B. Further details suggest that Exports increased by 18% compared to 15% expected and 17.9% prior whereas the Imports eased to 2.3% compared to 3.7% expected and 1.0% prior.

The anxiety surrounding upcoming data increased after a firmer US employment report for July that underpinned hawkish Fed bets and recalled the US dollar bulls, allowing the US Dollar Index (DXY) to snap a two-week downtrend. That said, the headline Nonfarm Payrolls (NFP) rose to 528K versus 250K expected and 398K upwardly revised prior. Further, the Unemployment Rate also inched lower to 3.5% compared to 3.6% expected and previous readings.

On a different page, the escalation in the US-China tussles surrounding Taiwan keeps the traders on their toes while also supporting the US dollar’s safe-haven demand. Reuters came out with the news suggesting that China is up for ‘regular’ military drills east of the Taiwan Strait median line. That said, the dragon nation’s Foreign Ministry announced on Friday that they will sanction US House of Representative Speaker Nancy Pelosi over the Taiwan visit. On the other hand, Taiwan's Defense Ministry reported 66 Chinese aircraft conducting activities in the Taiwan Strait as of 5 pm local time on Sunday. Further, US Secretary of State Anthony Blinken mentioned that China's provocative actions were a significant escalation.

Talking about the Fedspeak, San Francisco Fed President Mary Daly said during the weekend that the Fed is far from done in combating inflation. The policymaker also added, “50 bps increase is definitely in play. We need to keep an open mind.”

Against this backdrop, Wall Street benchmarks closed negative and the US 10-year Treasury yields rallied to 2.83%, up 14 basis points (bps), to renew the US dollar strength.

Looking forward, the Swiss Unemployment Rate for July, expected to remain unchanged at 2.2%, will precede Wednesday’s US CPI to direct short-term USD/CHF moves. However, major attention will be given to risk catalysts and the Fed-linked talks for clear directions.

Technical analysis

USD/CHF seesaws between the 100-DMA resistance surrounding 0.9635 and a weekly support line near 0.9585 as buyers struggle to retake control.