USD/CHF recovers some lost ground to 0.8770, investors await US PPI

• USD/CHF gains momentum and edges higher to 0.8765 in the early Asian session.
• The US CPI rose to 3.2% YoY from 3% in June, the Core CPI figure fell to 4.7% from 4.8%.
• US President Joe Biden issued an executive order prohibiting new US investments in China.
• Market players await the US Producer Price Index (PPI) for July.

The USD/CHF pair recovers some lost ground to 0.8770 after reaching the bottom around 0.8690 following the US inflation data. Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD against six other major currencies, surges above 102.60 on Friday, the highest daily close in a month.

The US Bureau of Labor Statistics (BLS) reported on Thursday that the US Consumer Price Index (CPI) rose to 3.2% YoY from 3% in June. The figure was below the market consensus of 3.3%. While, the Core CPI figure, which excludes volatile food and energy prices, fell to 4.7% from 4.8%. Additionally, the US Initial Jobless Claims increased to 248,000, above the expectation of 230,000. In response to the data, the US Dollar reversed its course and strengthened against its rivals.

On Thursday, Federal Reserve Bank of San Francisco President Mary C. Daly stated that there is a lot more information to evaluate. It is premature to project whether additional rate increases or a prolonged period of holding rates are required. She added that they are far from having a conversation about rate cuts.

On the Swiss front, US President Joe Biden issued an executive order on Wednesday prohibiting new US investments in China in sensitive technologies. That said, the US intends to target only Chinese companies that generate more than 50% of their revenue from quantum computation and artificial intelligence (AI).

However, the restrictions would apply to "narrow subsets" of the three domains, but the administration did not provide further details  and the proposal is available for public comment. The exacerbated trade war tensions between the world’s two largest economies might benefit the safe-haven Swiss Franc and act as a headwind for the USD/CHF pair.

Earlier this week, the Swiss Unemployment Rate came in at 1.9% in July, matching expectations. The figure remained unchanged compared to the June reading and marked its lowest level since October 2022.

Looking ahead, market participants will closely watch the release of the US Producer Price Index (PPI). The figure is expected to rise from 0.1% to 0.7% YoY. Also, the University of Michigan (UoM) Consumer Confidence Survey will be due in the American session. Investors will keep an eye on the data and find trading opportunities around the USD/CHF pair.