USD/CHF aims to recapture 0.9800 ahead of US PMI and Swiss Retail Sales

• USD/CHF is advancing towards 0.9800 despite softer US employment data.
• The Fed has already warned about softening labor market amid soaring interest rates.
• Swiss Real Retail Sales data is seen higher at 3.3% vs. 1.2%.

The USD/CHF pair is marching northwards gradually after a firmer rebound from the critical support to near 0.9740. The asset is expected to recapture its monthly highs at 0.9800 as the US dollar index (DXY) displayed stability on Wednesday despite weaker US Automatic Data Processing (ADP) Employment Change data.

The DXY defended the crucial support of 108.40 after the release of the downbeat US ADP employment data. As the US economy is operating at full employment levels and also the corporate sector announced lay-offs and ditched the recruitment process at their earnings call for a while, dismal job additions were already expected.

The US ADP Employment Change landed at 132k, lower than the consensus of 288k.  Also, the Federal Reserve (Fed) warned that softening the labor market will be the outcome of hiking interest rates. Therefore, the economic data had a manageable impact on the DXY.

Going forward, the US ISM Manufacturing PMI will be of utmost importance. As higher interest rates have squeezed liquidity from the market and funds availablility for disposal is extremely low, US economic activities are declining sharply. The economic data is seen lower at 52.0, than the prior release of 52.8. Lower investments from the corporate sector have also impacted the employment data.

On the Swiss franc front, investors are awaiting the Real Retail Sales data, which is seen at 3.3%, significantly higher than the prior release of 1.2%. A decent improvement in the economic data indicates an acceleration in the overall demand.