USD/CHF trades with modest losses, around 0.9100 mark post-US CPI

The USD/CHF pair managed to rebound around 20 pips from daily lows, with bulls making a fresh attempt to build on the momentum beyond the 0.9100 mark.

The pair failed to capitalize on the previous day's late rebound of over 50 pips from 1-1/2-week lows and edged lower for the third consecutive session on Friday. The downfall was exclusively sponsored by the prevalent selling bias surrounding the US dollar, though lacked follow-through amid indications of a positive opening in the US equity markets.

The greenback remained depressed through the first half of the trading action on the last day of the week and was being weighed down by the political deadlock over the US fiscal stimulus measures. Democrats on Thursday voted to block a Republican bill on grounds that the package was far lower than what they have been pushing for.

However, a positive tone around the equity markets undermined the Swiss franc's safe-haven demand and extended some support to the USD/CHF pair. Meanwhile, the latest leg of an uptick over the past hour or so was triggered by hotter-than-expected US consumer inflation figures for August, which provided some respite to the USD bulls.

In fact, the headline CPI decelerated to 0.4% in August from the 0.6% previous but was just above consensus estimates pointing to a reading of 0.3%. Adding to this, the yearly rate edged higher to 1.3% as against 1.2% anticipated and 1% in July. The core CPI (excluding energy and food costs) also came in better-than-expected during the reported month.

Given that the Fed has shown readiness to allow inflation to overshoot the 2% target for some time, the market reaction to the data turned out to be rather muted. This, in turn, failed to assist the pair to attract any meaningful buying interest, making it prudent before positioning for any near-term positive move.

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