USD/CHF copies sluggish markets below 0.8800, Swiss data, Jackson Hole eyed

• USD/CHF lacks downside momentum after welcoming bears the previous day.
• Light calendar, cautious mood ahead of next week’s annual Jackson Hole Symposium trigger market’s consolidation.
• Yields retreat from worrisome levels, allowing Greenback buyers to take a breather.
• Swiss Industrial Production, risk catalysts eyed for intraday directions.

USD/CHF struggles for clear directions around 0.8780 after posting the first daily loss of the week the previous day.

In doing so, the Swiss Franc (CHF) pair traces the market’s lackluster moves amid anxiety ahead of the mid-ties Swiss data, as well as the next week’s annual event at the Jackson Hole Symposium where the top-tier central bankers speak.

That said, a light calendar and the market’s mixed feelings about the risk appetite also test the USD/CHF momentum traders as the yields retreat but the optimists hesitate to take control.

US 10-year Treasury bond yields dropped by around five basis points (bps) in the last hour to 4.25%.

On the other hand, S&P500 Futures rebound from the lowest level since June 27, marked the previous day, while stabilizing near the 4,385-90 zone as it prods the three-day losing streak. Further, the MSCI’s Index of Asia-Pacific shares outside Japan extends the previous day’s corrective bounce off an 11-week low marked on Wednesday.

Amid these plays, the US Dollar Index (DXY) clings to mild losses near 103.20 as the Greenback buyers remain hopeful despite the latest pullback in prices, as well as the yields. The reason could be linked to this week’s mostly upbeat US data and hawkish Fed Minutes.

On Wednesday, US Philadelphia Fed Manufacturing Survey marked the strongest print since April 2022, as well as the first positive outcome in a year, while rising to 12.0 for August from -13.5 prior and -10.0 expected. On the same line, the US Initial Jobless Claims also edged lower to 239K for the week ended on August 11 versus a revised up 250K prior and the market expectations of 240K. Earlier in the week, the US Industrial Production and Retail Sales for July marked surprising growth but the housing numbers were mixed.

That said, the latest Fed Minutes showed that most policymakers preferred supporting the battle again the ‘sticky’ inflation, despite being divided on the imminent rate hike, which in turn challenges the market’s previous policy pivot concerns about the US central bank.

On a different page, China’s second-large realtor, as well as the world's most heavily indebted property developer, Evergrande filed for protection from creditors in a US bankruptcy court on Thursday, per Reuters, which in turn propelled the market’s fears. The same escalates woes surrounding the world’s second-largest economy, as well as the global economic transition, as it battles with the slowing economic recovery and fuels concerns about the financial health of China’s biggest realtor, namely Country Garden. However, the concerns about Chinese policymakers’ readiness for more stimulus to defend the economy from debt woes seem to have challenged the pessimists.

Looking ahead, Swiss Industrial Production for the second quarter of 2023, prior 3.4% YoY, will offer immediate directions to the USD/CHF pair. However, major attention will be given to the risk catalysts amid a light calendar elsewhere.

Technical analysis

A one-month-old rising wedge bearish chart formation, currently between 0.8840 and 0.8740, keeps the USD/CHF sellers hopeful despite the pair’s latest inaction.