USD/CHF climbs further beyond 0.9200 mark amid upbeat market mood/stronger USD
- A combination of factors pushed USD/CHF higher for the second successive session on Monday.
- The risk-on mood undermined the safe-haven CHF and remained supportive amid stronger USD.
- The market focus now shifts to this week’s release of the US CPI report and Retail Sales figures.
The USD/CHF pair continued scaling higher through the early European session and shot to fresh daily tops, further beyond the 0.9200 round-figure mark in the last hour.
A combination of supporting factors assisted the USD/CHF pair to gain strong positive traction on the first day of a new trading week and build on Friday's modest rebound from mid-0.9100s. The risk-on impulse – as depicted by a generally positive tone around the equity markets – undermined demand for the safe-haven Swiss franc. This, along with sustained US dollar buying interest, provided an additional boost to the major for the second successive day.
The USD remained well supported by firming market expectations that the Fed will begin rolling back its pandemic-era stimulus sooner rather than later. The speculations were further fueled by Philadelphia Fed President Patrick Harker's comments on Monday, who joined a chorus of policymakers keen to trim $120 billion in monthly bond purchases. This, along with the recent spike in the US Treasury bond yields, acted as a tailwind for the greenback.
The yield on the benchmark 10-year US government bond climbed back closer to the 1.35% threshold on Friday following the release of the US Producer Price Index (PPI). The PPI recorded the largest gain since November 2010 and indicated that higher inflation could persist for some time. Hence, the focus now shifts to the latest US consumer inflation report on Tuesday. Apart from this, traders, this week will further take cues from the release of US Retail Sales figures.
The data will play a key role in influencing market expectations about the Fed's next policy move and drive the USD ahead of the crucial FOMC monetary policy meeting on September 20-21. In the meantime, the broader market risk sentiment might produce some trading opportunities around the USD/CHF pair amid absent relevant market-moving economic data on Monday.
Technical levels to watch