USD/CHF extends declines ahead of Swiss CPI

• USD/CHF dropped from four-month high amid overall risk-off sentiment.
• Macro pessimism highlighted the Swiss Franc’s (CHF) safe-haven appeal.
• Swiss inflation, the US ADP and Fedspeak in the spotlight for now.

In addition to a pullback from the multi-month top, on-going risk-aversion also drags the USD/CHF pair downwards as it trades near 0.9925 on Wednesday morning.

Although disappointing prints of Swiss Retail Sales and SVME Purchasing Managers’ Index (PMI) triggered the quote’s initial run-up to June month high, downbeat readings of the EU and the US PMIs renewed fears of global recession and hence triggered the slump due to the CHF’s safe-haven nature.

Also supporting the risk aversion is the political pessimism surrounding the US President Donald Trump’s likely impeachment and uncertainty concerning the trade deal with China.

With this, investors ran away from the equities and the bond yields declined. However, a pullback in the US 10-year Treasury yield to 1.65% could recently be witnessed.

Moving on, September month Swiss Consumer Price Index (CPI) and the US ADP Employment Change will decorate the economic calendar whereas a scheduled speech from the Federal Reserve Bank of New York President John Williams will also entertain momentum traders.

While Swiss CPI is expected to recover to 0.1% from 0.0% on MoM basis, no change is likely to take place in the yearly figure of 0.3%. Further, the US ADP Employment Change, an early signal for Friday’s Nonfarm Payrolls (NFP), might weaken to 140K from 195K prior.

Technical Analysis

Any downside is less likely to impress bears unless breaking an upward sloping trend-line since mid-August around 0.9875 now, which in turn keeps the odds of witnessing 1.0100 and late-May month high of 1.0123 on the table.