USD/CHF retraces from a multi-week high, holds above 0.8840, eyes on Swiss CPI/ US NFP

• USD/CHF holds below the mid-0.8800s after retreating from a multi-week high of 0.8876.
• Fed Chairman Jerome Powell said they are prepared to raise interest rates further, if necessary.
• Chinese authorities would reduce the 0.1% duty on stock trading to stimulate the capital market and strengthen investors' confidence.
• The key event this week will be Chinese Caixin Manufacturing PMI, Swiss Consumer Price Index YoY, US Nonfarm Payrolls.

The USD/CHF pair retraces from a multi-week high of 0.8876 amid the decline of US Treasury bond yields during the early Asian session on Monday. Meanwhile, the US Dollar Index (DXY), a measure of the value of USD against six other major currencies, remains above 104.10, close to a monthly high. At the time of writing, the USD/CHF is trading at 0.8847, up 0.01%.

At the Jackson Hole Economic Symposium on Friday, the Federal Reserve (Fed) Chairman Jerome Powell stated that the central bank is prepared to raise interest rates further, if necessary, and will determine the next rate move based on data. Powell also indicated that the strong economic growth and tight labor market conditions might pave the way for further tightening cycle. He added that if the data do not show indications of softening, additional rate rises would be appropriate. Following the hawkish comments, the Greenback attracts some buyers.

Apart from this, Philadelphia Fed President Patrick Harker said that he does not see the need for additional rate hikes at this time and the Fed should hold rates steady and observe the impact of policy on the economy. Meanwhile, Cleveland Fed President Loretta Mester said that GDP and labor market data show that the economy is gaining momentum. She emphasized that the current rates are not restrictive enough to reach the inflation target and a lower growth rate would be essential to moderate inflation.

About the data on Friday, the University of Michigan's (UoM) Consumer Confidence Index for August fell to 69.5 from 71.6 in July and was revised from the first reading of 71.2. Additionally, The Current Conditions Index dropped from 76.6 to 75.7 (revised from 77.4), while the Expectations Index fell from 68.3 to 65.5 (revised from 67.3).

On the other hand, the Chinese finance ministry said on Sunday that the authorities would reduce the 0.1% duty on stock trading to stimulate the capital market and strengthen investor confidence. Alongside the action by the Ministry of Finance, the China Securities Regulatory Commission (CSRC) is implementing measures to bolster market confidence in listed companies after the Chinese equities index slumped to nine-month lows. Investors will keep an eye on the Chinese Caixin Manufacturing PMI for August due on Friday. The concerns about China's deteriorating economic conditions should dampen market optimism. This may benefit the traditional safe-haven Swiss Franc and act as a headwind for the USD/CHF pair.

Later this week, market players will focus on the Swiss KOF Leading Indicator for August, the ZEW Survey, and the Consumer Price Index YoY. On the US docket, the US Core Personal Consumption Expenditures (PCE) Index and the weekly Jobless Claims will be due on Thursday. The key event will be the Nonfarm Payrolls data on Friday. These figures might trigger the volatility in the market and traders will find the trading opportunities around the USD/CHF pair.