USD/CHF retakes 0.9900 mark amid modest pickup in USD demand, ahead of US ISM PMI

• USD/CHF turns positive for the second straight day and draws support from a combination of factors.
• Aggressive Fed rate hike bets continue to underpin the USD and remain supportive of the move up.
• A positive risk tone dents demand for the safe-haven CHF and provide an additional lift to the major.

The USD/CHF pair attracts fresh buying near the 0.9830 region on Monday and turns positive for the second successive day. The intraday move up picks up the pace and lifts spot prices back above the 0.9900 mark, or a three-day high during the first half of the European session.

Following an early dip, the US dollar catches fresh bids on the first day of a new week and allows the USD/CHF pair to capitalize on Friday's strong rally of nearly 150 pips from the 0.9730 area. Apart from this, a modest recovery in the global risk sentiment - as depicted by a positive tone around the US equity futures - undermines the safe-haven Swiss franc and provides an additional lift to the major.

The USD uptick, meanwhile, seems unaffected by a softer tone surrounding the US Treasury bond yields and continues to take cues from expectations that the Fed will stick to its aggressive rate hiking cycle. In fact, the markets have been pricing in another supersized 75 bps Fed rate increase in November. This, in turn, should act as a tailwind for the US bond yields and favours the USD bulls.

Market participants now look forward to the US economic docket, featuring the ISM Manufacturing PMI for a fresh impetus later during the early North American session. The focus, however, will be on Friday's release of the US monthly jobs report, popularly known as NFP. Nevertheless, the USD/CHF pair seems poised to climb further towards the 0.9945-0.9950 supply zone, or a multi-month high set in September.

Technical levels to watch