USD/CHF sets to recapture 0.9800, DXY gyrates wild ahead of US ISM Services PMI

• USD/CHF is hovering around 0.9800 as DXY has recovered a majority of its losses.
• Investors await the release of the US ISM Services PMI, seen at 55.5 vs. 56.7.
• Fed Powell’s speech will dictate the likely monetary policy action for the September meeting.

The USD/CHF pair has recovered firmly after correcting mildly to near 0.9787. The asset is expected to remain on the sidelines as investors are awaiting the release of the US ISM Services PMI data. As per the consensus, a decline is expected in the extent of Services PMI.

According to the estimates, the Services PMI will land at 55.5 lower than the prior release of 56.7. It says that corporate conferences during earnings season provide meaningful guidance for future prospects. Big tech boys considered a halt in recruitment processes in anticipation of subdued growth prospects.

The Federal Reserve (Fed) is squeezing liquidity from the market vigorously to combat the mounting price pressures. The velocity of hiking interest rates is extremely firm and the corporate is facing the repercussions. The unavailability of cheaper funds has forced them to postpone investment opportunities and expansion plans, which are resulting in a decline in the overall economic activities.

Meanwhile, the US dollar index (DXY) has recovered the majority of its morning losses and is likely to extend recovery ahead of the speech from Fed chair Jerome Powell on Thursday. Fed Powell is expected to sound hawkish on interest rate guidance as the inflation rate is extremely deviated from the desired rate despite showing exhaustion signals in the July report.

On the Swiss franc front, less-than-expected Real Retail Sales data have weakened the Swiss franc. The economic data landed at 2.6%, lower than the consensus of 3.3% but remained higher than the prior release of 0.7%. Also, the Consumer Price Index (CPI) has improved to 3.5% against expectations and the former print of 3.4% on an annual basis.