USD/CHF holds ground above 0.9200 near seven-month high, US data eyed

• USD/CHF traces an upward trend due to the Fed’s hawkish stance on interest rate trajectory.
• US Dollar strengthens on higher US Treasury yields, coupled with Solid US jobs data.
• SNB is expected to maintain steady interest rates at the upcoming meeting.

USD/CHF holds ground near a seven-month high marked on Tuesday, trading higher for the third consecutive day around 0.9220 during the early European trading hours on Wednesday. The pair is experiencing upward support amid cautious sentiment due to the US Federal Reserve’s (Fed) interest rates trajectory.

The US Dollar Index (DXY) hovers around 107.10 at the time of writing, aligned with the 11-month high marked on Tuesday. The US Dollar (USD) strength is driven by robust US employment data and higher US Treasury yields.

US JOLTS Job Openings exceeded expectations, contributing to an increase in US Treasury yields. The 10-year US Bond yield reached its highest level since 2007, hitting 4.85% on Wednesday.

The JOLTS report revealed that job openings improved to 9.61 million in August from the previous reading of 8.92 million, surpassing market expectations. Additionally, the hawkish tone surrounding the Fed to keep interest rates higher for a prolonged period is reinforcing positive sentiment for the Greenback.

Cleveland Federal Reserve President Loretta Mester indicated a likelihood of favoring an interest rate hike at the next meeting if the current economic conditions persist. On the other hand, Atlanta Fed President Raphael Bostic shared a patient perspective on the Fed's policy outlook, stating that there is no rush to raise or reduce rates.

Market participants are eagerly awaiting the US employment data, with the release of the ADP report on Wednesday and the Nonfarm Payrolls on Friday.

On the Swiss side, the Swiss National Bank (SNB) opted to maintain interest rates at 1.75%, deviating from the expected 2.00%. The central bank justified this decision by citing the substantial tightening observed in recent quarters as a counterbalance to the lingering inflationary pressures.

The latest Switzerland CPI data reiterates that the inflation rate comfortably resides within the SNB's 0-2% target band for both headline and core measures. The Unemployment Rate, maintaining its previous reading, lingers at cycle lows.

The Manufacturing PMI has witnessed a notable rebound, though it remains in contraction, while the Services PMI stays in expansion.

Market expectations align with the anticipation that the SNB will maintain steady rates at the upcoming meeting.