USD/CHF remains capped below the 0.8800 barrier ahead of US Retail Sales

• USD/CHF trades sideways below the 0.8800 barrier  after retreating from a multi-week high in the early Asian session. 
• The markets are convinced that the Federal Reserve (Fed) will keep the rate unchanged in its September meeting.
• The exacerbated trade war tensions between the US and China might benefit the Swiss Franc.
• Traders will take cues from the Swiss Producer and Import Prices, US Retail Sales.

The USD/CHF pair holds ground around 0.8782 during the early Asian session on Tuesday. The pair remains sideways after retreating from multi-week high of 0.8827. Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD against six other major currencies, trades The major pair remains capped around the 0.8800 barrier ahead of the Swiss Producer and Import Price Index for July and the US Retail Sales data.

Investors anticipate that the Federal Reserve (Fed) will keep the interest rate unchanged in its September meeting, but the possibility for an additional rate hike of 25 basis points (bps) increased to almost 40% in November. However, interest rates will stay high for longer in order to assure the return of inflation to 2%. This would maintain recession concerns. Market players will take more cues from US Retail Sales in July due on Tuesday and FOMC Minutes due later on Thursday. A more hawkish stance by the Fed might lift the US Dollar against its rivals.

On the other hand, market players is expected that the Swiss National Bank (SNB) will raise interest rates by 25 basis points (bps) to 2% in September, according to Bllomberg. About the data, 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.

Furthermore, the headling surrounding the US-China relationship remains in focus. As a result of President Joe Biden's decision to restrict certain US technology investments in China, US investors have expressed concern that Beijing may retaliate or cease purchasing American technology. The renewed trade tension might benefit the safe-haven Swiss Franc and act as a headwind for the USD/CHF pair.

Moving on, the Swiss Federal Statistical Office will release the Producer and Import Prices on Tuesday. Meanwhile, US Retail Sales will be due later in the day. The monthly figure is expected to rise from 0.2% to 0.4% in July. Market participants will also monitor the FOMC minutes and the Fed officials’s comments for the Jackson Hole Symposium. Traders will take cues from the data and find trading opportunities around the USD/CHF pair.