USD/CHF struggles around 0.9600 on upbeat market sentiment, US CPI eyed

• USD/CHF has faced barricades around 0.9600 amid a risk-on market tone.
• Lower consensus for the US CPI is impacting the mighty DXY.
• The Swiss Franc’s lower jobless rate has weakened the USD/CHF pair.

The USD/CHF pair is facing less-confident hurdles around 0.9600 in the early Tokyo session. The asset moved higher after a tepid opening around 0.9580 but is facing exhaustion signals amid a risk-on market mood. A failure to sustain above 0.9600 will drag the greenback bulls towards the previous week’s low of around 0.9560.

A lower consensus for the US Consumer Price Index (CPI) is impacting the mighty US dollar index (DXY). As per the market forecasts, US inflation is seen lower at 8.1% vs. 8.5% recorded for July on an annual basis. A decent drop in headline CPI led by falling gasoline prices and soaring interest rates by the Federal Reserve (Fed) is sufficient to activate bears in the DXY counter.

Investors should be aware of the fact that declining oil infused-inflation will not trim the odds of a third consecutive 75 basis point (bps) rate hike by the Fed. Price pressures are still beyond the desired rate of 2% and it will take a hell of sweat to fix the inflation monster. The core CPI that excludes oil and food prices will improve by 10 basis points (bps) to 6%.

Fed Governor Christopher Waller said on Friday that it was too soon to say whether inflation was moving meaningfully and persistently downward, as reported by Reuters. Fed policymaker added further that the tight labor market has faded signs of recession ahead and the extent of the rate hike will be more data-driven.

On the Swiss franc front, it is worth noting that the decline in the USD/CHF pair is significantly higher than the decline in the mighty US dollar index (DXY) in a broader context. This indicates that the Swiss franc bulls have strengthened extremely after a decline in Swiss Unemployment Rate data. Last week, the Swiss jobless rate landed at 2.1%, against 2.2% as expected on a monthly basis.