USDCHF retreats from 0.8970 ahead of US Employment and FOMC minutes

  • USD/CHF has fallen back from 0.8970 as the USD Index has retreated.
  • S&P500 futures have posted nominal losses as investors have turned cautious amid the holiday in the US.
  • An inflation figure below 2% would allow the SNB to pause the policy-tightening spell.

The USD/CHF pair has witnessed extreme selling pressure after a less-confident pullback to near 0.8970 in the early London session. The Swiss Franc asset has retreated following the footprints of the US Dollar Index (DXY). The USD Index has dropped sharply as investors have shifted their focus toward the release of the United States Employment data.

S&P500 futures have posted nominal losses in Europe as investors have turned cautious amid the holiday in the United States. US markets will be closed on account of Independence Day. The USD Index has come under pressure as economic prospects in the US economy are going through a rough phase.

US Factory activity has dropped sharply as firms are facing issues while tapping for credit from regional banks due to tight conditions for loans. The US Institute of Supply Management (ISM) reported that Manufacturing PMI has extended its contraction straight for eight months. A figure below 50.0 is considered a general contraction in economic activities. The economic data landed at 46.0, significantly lower than the expectations of 47.2 and the former release of 46.9.

Going forward, Federal Open Market Committee (FOMC) minutes will be in focus. The minutes will provide a detailed explanation of steady interest rate policy and views about interest rate guidance.

Apart from that, US Automatic Data Processing (ADP) Employment data will be keenly watched. A decline in payrolls is expected to be 180K for June vs. the former release of 278K.

Meanwhile, the appeal for the Swiss Franc has been trimmed as the monthly Consumer Price Index (CPI) accelerated at a pace of 0.1% lower than the pace observed last month at 0.3%. Annualized CPI has decelerated to 1.7% vs. expectations of 1.8%. A figure below 2% would allow the Swiss National Bank (SNB) to pause further policy tightening.

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