USD/CHF marches towards 0.9800 as focus shifts to US Inflation

• USD/CHF is advancing towards 0.9800 on a souring market mood.
• A higher seen US inflation event has trimmed the advocacy for the risk-sensitive currencies.
• A stable jobless rate has failed to cheer the Swiss franc bulls.

The USD/CHF pair has witnessed a firmer rebound at open from 0.9768 and is advancing towards the round-level resistance of 0.9800 on negative market sentiment. Uncertainty over the release of the US Consumer Price Index (CPI) on Friday has underpinned the risk-off impulse, which has improved the safe-haven’s appeal.

The annual US inflation is seen unchanged at 8.3% while the core CPI may slip to 5.9% against the prior print of 6.2%. Rising price pressures are tackled by restricted quantitative measures. The Federal Reserve (Fed) has already raised its interest rates by 25 basis points (bps) and 50 bps in March and May respectively. However, a minimal effect has been recorded on price pressures post the rate hike announcements. Adaptation of quick pace in quantitative tightening will trim the demand forecasts significantly, which has already shifted the risk-perceived assets on the tenterhooks.

Meanwhile, the US dollar index (DXY) has turned sideways in a 102.27-102.78 range ahead of the US inflation. Next week, the mega event of monetary policy announcement by the Fed will keep the DXY in the grip of bulls. As expected, the outcome of higher inflation will be joined by the upbeat US Nonfarm Payrolls (NFP) and will bolster the odds of a consecutive 50 bps rate hike announcement by the Fed.

On the Swiss franc front, stability in the jobless rate has failed to cheer the market participants. The Swiss State Secretariat of Economic Affairs has reported the Unemployment Rate at 2.2%. It looks like the Swiss franc bulls are not reacting much to the domestic data and are being guided by the US inflation event.