USD/CHF advances as markets await a fresh catalyst

Around 0.8800, the USD/CHF pair displays modest increases. Since early August, the price of the pair has been moving sideways. Thomas Barking of the Fed made some pessimistic remarks that helped the USD.

Investors are anticipating Powell’s remarks on Friday and the US August PMIs on Wednesday. On Tuesday, the USD/CHF traded modestly higher, close to the pivotal 0.8800 level. In the US, Fed’s Thomas Barking stated that additional tightening may be required as markets await the August PMIs due out on Wednesday and Jerome Powell’s speech on Friday.

On the Swiss side, Switzerland reported a higher than expected Trade Balance deficit in July, which seems to be pressuring the Swiss Franc. Besides that, no relevant data will be released on the Swiss front for the rest of the week.

That said, the USD measured by the DXY index upside potential is limited in a risk-positive market environment, with major US stock indexes closing green on Monday’s session.

Fed’s Thomas Barkin delivered hawkish comments and stated that “If inflation remains high and demand gives no signal that it is likely to drop, that would require a tighter monetary policy”. As a reaction, US Treasury yields recovered some ground, and hawkish bets may limit further losses for the dollar.

The Jackson Hole Symposium and S&P Global Manufacturing figures from July will be crucial for investors to model their expectations for the next Fed meeting. These figures show decelerating economic activity but remain in expansion territory. Markets are confident that the Fed will pause in September and bet on a 25-basis point hike in November.