USD/CHF persists on a downward trajectory toward 0.9100, Swiss CPI, US PMI eyed

• USD/CHF weakens ahead of Switzerland’s Consumer Price Index on Tuesday.
• Market expects Swiss CPI to grow at 1.8% against the previous figures of 1.6%.
• Fed’s hawkish stance on interest rates trajectory strengthens the US Dollar (USD).
• Higher US Treasury yields contribute support to underpin the Greenback.

USD/CHF continues to move on the downward pathway, trading lower around 0.9120 during the early European trading hours on Monday. The pair experiences downward pressure due to upbeat economic data from Switzerland.

Swiss Real Retail Sales (YoY) data revealed a less decline in Swiss consumer demand for August. The report showed a contraction of 1.8% as expected compared to the previous 2.5% decline.

The Swiss Consumer Price Index (CPI) data is scheduled to be released on Tuesday, which is expected to grow at 1.8% against the previous figures of 1.6%. This event can potentially influence market dynamics and impact the movements in the Swiss Franc.

Additionally, over the weekend, Chinese Manufacturing PMI data showed improvement into positive territory, which could impact the strength of the Greenback. This development might have provided support for the Swiss Franc (CHF) as it is considered the safe-haven currency.

China’s NBS Manufacturing PMI for August grew to 50.2 from the previous 49.7 figures, exceeding the 50.0 expected. Additionally, the Non-Manufacturing PMI rose to 51.7 from the 51.0 previous reading, surpassing the market consensus of 51.5.

However, the Fed is expected to attempt another 25 basis points (bps) rate hike through the end of the year. Additionally, the market is factoring in the likelihood of higher interest rates for a prolonged period, which could provide support to underpin the US Dollar (USD).

The US Dollar Index (DXY) holds ground at around 106.20 at the time of writing. The US Dollar (USD) strengthened after the release of moderate economic data on Friday. The US Michigan Consumer Sentiment Index for September improved to 68.1 from the previous figure of 67.7, beating expectations for no change.

The US Core Personal Consumption Expenditures (PCE) - Price Index (YoY) for August rose as estimated, reaching 3.9%, but showed a slight easing from the previous reading of 4.3%. Core PCE (MoM) recorded a softer reading of 0.1% against the market consensus for it to remain consistent at the 0.2% prior.

Moreover, the positive performance of US Treasury Yields provides further support for the USD. The yield on the 10-year US Treasury bond stands at 4.61% at the moment, marking a 0.96% increase.

After the Friday session, bills were successfully passed in the US to prevent a government shutdown, securing funding until November 17. This positive development has led to a renewed upward trajectory for the US Dollar Index (DXY).

The avoidance of a government shutdown typically contributes to stability in financial markets, and the resumption of the DXY's upward movement suggests increased confidence in the US dollar among investors.

Traders will likely pay close attention to the upcoming US ISM Manufacturing PMI for September ahead of a speech by Fed Chair Jerome Powell on Monday.