USD/CHF remains sideways near 0.8850 ahead of US Factory Orders

The USD/CHF pair remains sideways in a narrow trading band between 0.8700 - 0.88450 region during the early Asian session on Tuesday. Meanwhile, the US Dollar Index (DXY), a measure of the value of USD against six other major currencies, consolidates its gains above the 104.00 mark, near a monthly high. At the time of writing, the USD/CHF is trading at 0.8848, gaining 0.06% on the day.

The Swiss economy remained stagnant in the second quarter. Data released from the Swiss Statistics on Monday showed that the nation’s Gross Domestic Product (GDP) Q2 dropped to 0.0% QoQ, below the market consensus of 0.1% and the previous quarter's reading of 0.3%. On an annual basis, the growth number remained at 0.5% as expected. 

The US Dollar (USD) is weakened against its rivals due to risk appetite. On Monday, the Chinese government plans to implement more measures, including the easing of restrictions on the purchase of homes, to stimulate China's faltering economy. However, the release of the Chinese Caixin Services PMI due later on Tuesday could offer some hints about the Chinese economy. The weaker-than-expected data could trigger the fear of economic slowdown in the second’s world largest economies and might benefit the traditional safe-haven Swiss franc (CHF).

US economic data last week displayed mixed results. August's Nonfarm Payrolls (NFP) came in at 187K, better than market expectations of 170K and the previous reading of 157K. Nevertheless, the Unemployment Rate fell substantially to 3.8%, compared to the market consensus and the previous rate of 3.5%. The US Manufacturing PMI came in at 47.6 versus 46.4 previously and exceeded expectations of 47.0.

That said, Fed Chairman Jerome Powell stated at the Jackson Hole Symposium that a potential additional rate hike would depend on incoming data. However, Market players speculate on a less aggressive Federal Reserve (Fed) stance following the mixed economic data results. The possibility of holding an interest rate at the September meeting remains at 93%, according to the CME FedWatch Tool. This, in turn, might cap the further upside in the Greenback and act as a headwind in the USD/CHF pair.

Looking ahead, the US Factory Orders MoM for July will be due later in the day. Market players will shift their focus to the US ISM Services PMI for August on Wednesday. Also, the Swiss monthly Unemployment Rate will be released on Thursday. These figures could give a clear direction for the USD/CHF pair.