USD/CHF challenges the 0.8800 area amid the USD demand

The USD/CHF pair edges higher to the 0.8800 area 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, extends its upside above 103.45, the highest level since June.

The minutes of July’s meeting of the Federal Open Market Committee (FOMC) emphasised that inflation remained unacceptably high. The Fed official saw significant inflationary risks, and it may need additional tightening of monetary policy to bring inflation to the longer-run target. 

The economic data released on Wednesday showed that the US Industrial Production increased 1.0% in July, beating market expectations of 0.3% and a prior decrease of 0.8%. In July, Building Permits increased from 1.44 million to 1.44 million, while Housing Starts increased from 1.39 million in June to 1.45 million, exceeding expectations of 1.48 million. Both the Change in Building Permits and the Change in Housing Starts exceeded both market expectations and prior readings. The US Dollar gains momentum across the board, supported by the hawkish statement by FOMC and the upbeat US data.

The Swiss Federal Statistical Office reported on Tuesday that Producer and Import Prices YoY for July came in at -0.6%, against the expectation of 0.5%. On a monthly basis, the figure contracted at 0.1% versus 0% prior. According to Bloomberg, the Swiss National Bank (SNB) will hike interest rates by 25 basis points (bps) to 2% in its September meeting.

On Wednesday, the American bipartisans supported imposing higher tariffs on Chinese imports and believed that the US must intensify preparations for military threats from China, according to a new Reuters/Ipsos survey. The renewed tension between the US and China might benefit the safe-haven Swiss Franc and act as a headwind for the USD/CHF pair.

In the absence of any relevant market-moving economic releases from Switzerland, the USD/CHF pair remains at the mercy of USD price dynamics. The US weekly Initial Jobless Claims for the week ending August 11 and the Philadelphia Fed Manufacturing Survey for August will be due in the American session. Traders will also focus on the US-China tension headlines for fresh cues.