USD/CHF posts modest gains below 0.8800, US PCI data eyed

• USD/CHF holds positive ground near 0.8777 in Monday’s early European session. 
• The US economy added 275,000 jobs in February vs. 229,000 prior, better than expected. 
• The rising Middle East geopolitical and economic uncertainties might lift safe-haven assets like the Swiss Franc (CHF). 
• The US February CPI and Retail Sales data will be closely watched this week. 

The USD/CHF pair posts modest gains below the 0.8800 psychological barrier during the early European session on Monday. The prospect that the Federal Reserve (Fed) will cut the interest rate this year exerts some selling pressure on the US Dollar (USD) and creates a headwind for the pair. Investors will closely watch the US CPI inflation on Tuesday for fresh impetus. At press time, USD/CHF is trading at 0.8777, up 0.04% on the day. 

The Federal Reserve (Fed) Chair, Jerome Powell, said during his semi-annual testimony last week that the US economy is robust and that the Fed is close to having enough confidence in inflation's downward track to begin lowering rates. According to the CME FedWatch Tools, futures markets have priced in around a 70% chance that the Fed will begin cutting interest rates by mid-June, with a full percentage point of rate reductions expected by year-end. 

The US Labor Department reported on Friday that the US economy added 275,000 jobs in February, up from 229,000 in January, better than the estimation of 200,000. Furthermore, the Unemployment Rate in the US climbed to 3.9% in the same month from 3.7% in January. The figure registered its highest level in two years. The US wage growth, as measured by Average Hourly Earnings, rose by 4.3% YoY in February versus 4.4% prior, below the market consensus of 4.4%.  

On the Swiss front, the ongoing geopolitical tensions in the Middle East and the economic uncertainties in major countries might boost safe-haven demand and benefit the Swiss Franc (CHF). In the Middle East, Hamas leader Ismail Haniyeh blamed Israel on Sunday for impeding cease-fire talks and rejecting Hamas' desire to stop the bloodshed in Gaza. Meanwhile, tensions are rising in Russia and its neighboring territories, raising fears about a possible war escalation beyond Ukraine. 

Traders will monitor the US February CPI and Retail Sales, due on Tuesday and Thursday, respectively. The headline CPI figure is forecast to remain steady at 3.1% YoY in February, while Retail Sales are estimated to improve to 0.7%. Traders will take cues from the data and find trading opportunities around the USD/CHF pair.