USD/CHF advances towards 0.9750 as DXY strengthens ahead of US NFP

• USD/CHF is marching towards the immediate hurdle of 0.9750 on hawkish Fed commentary.
• An improvement in the US JOLTS Job Openings data and Consumer Confidence has supported the DXY.
• Swiss’s Real Retail Sales data is expected to land at 3.3% vs. 1.2% recorded earlier.

The USD/CHF pair is marching towards the immediate hurdle of 0.9750 after a time-based correction to near 0.9726 on Tuesday. The asset has remained in the grip of bulls after a firmer rebound from Friday’s low at 0.9577. In the early Tokyo session, the major is displaying signs of volatility contraction, which is expected to turn into volumes and wider ticks.

The US dollar index (DXY) has turned sideways after a minor correction from Tuesday’s high of 109.11. Broadly, the asset is extremely bullish led by a solid improvement in the US JOLTS Job Openings data, upbeat Consumer Confidence, and hawkish commentary from Federal Reserve (Fed) policymakers.

The JOLTS Job Openings data landed at 11.239M, higher than the expectations of 10.475M and the prior release of 11.04M. This indicates that the labor market is rock solid, which will boost the confidence of the Fed in announcing more rate hikes. Also, the US CB Consumer Confidence improved dramatically to 103.2 vs. 95.3 reported in July.

The commentary from New York Fed Bank President John Williams that interest rates are needed to elevate further above 3.5% to tame the soaring price pressures. This has strengthened the odds of a third consecutive 75 basis points (bps) rate hike by the Fed in its September monetary policy meeting.

Going forward, the release of the US Nonfarm Payrolls (NFP) data will be of significant importance. As per the market expectations, the US economy has added 300k in August vs. 528k reported in July. While, the Real Retail Sales data from the Swiss zone will be keenly watched, which is expected to improve dramatically to 3.3% from the prior release of 1.2%. A decent improvement in the economic data indicates an acceleration in the overall demand.