USD/CHF edges higher on Monday as softer Swiss inflation data and a modest recovery in the US Dollar (USD) weigh on the Swiss Franc (CHF).
At the time of writing, the pair trades around 0.8109, up 0.38% on the day
Franc under pressure as muted Swiss inflation keeps SNB on hold Strategists at Brown Brothers Harriman highlight that “Swiss July CPI stays muted,” with inflation data underscoring the lack of price pressures in the economy. They note that, “in line with consensus, headline CPI printed at 0.4% y/y vs. 0.5% in June while core CPI remained at 0.3% y/y for a fourth straight month.” Against this backdrop, BBH concludes that the “bottom line: the SNB has plenty of room to keep rates at 0.00% for some time, which is an ongoing drag for CHF,” adding that the Franc is currently “the worst performing G10 currency so far this quarter.” On the US side, the Greenback shows signs of stabilization following last week’s sell-off, triggered by coordinated intervention from Washington and Tokyo to counter excessive weakness in the Japanese Yen (JPY). Stronger-than-expected US ISM Manufacturing Purchasing Managers Index (PMI) data lends some support to the Greenback.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.96, rebounding from an intraday low of 99.42, its weakest level since June 15. Technical analysis On the daily chart, USD/CHF retests the 21-day Simple Moving Average (SMA) near 0.8110 after slipping below it last week. The pair is above the 50-day and 100-day SMAs, keeping the broader outlook mildly constructive.