USD/CHF surges above 0.8660 as US economy turns out surprisingly resilient

• USD/CHF gallops above 0.8660 as upbeat US economic data supports interest rate hike by Fed in September.
• US GDP for the second quarter and Durable Goods Orders for June surprisingly beat expectations.
• More action is expected in the US Dollar Index as the core PCE Price Index for June will release on Friday.

The USD/CHF pair has recovered swiftly above the critical resistance of 0.8660 as the United States Gross Domestic Product (GDP) for the second quarter and Durable Goods Orders for June surprisingly beat expectations. Also, jobless claims registered by individuals for the first time were below consensus.

S&P500 opens on a bullish note as investors hope that the interest rate hike of 25 basis points (bps) by the Federal Reserve (Fed) announced on Wednesday was the last one in the current tightening cycle. Sentiment for US equities is positive while appeal for risk-sensitive currencies has faded.

The US Dollar Index (DXY) has printed a fresh two-week high at 101.71 as upbeat economic indicators have renewed hopes of one more interest rate hike from the Fed in its September meeting. Fed Chair Jerome Powell conveyed in his commentary that the interest rate decision for September will be data-dependent.

The upbeat expansion of GDP in the second quarter, robust demand for Durable Goods, and elongated tight labor market conditions indicate that the Fed could look for raising interest rates further. Economic resilience indicates that inflationary pressures could remain stubborn and more interest rates would be warranted.

More action is expected in the US Dollar Index as the core Personal Consumption Expenditure (PCE) Price Index for June will release on Friday at 12:00 GMT.

On the Swiss Franc front, more interest rates by the Swiss National Bank (SNB) are in the pipeline as inflation would take time to come below 2% steadily.