Ella 
In early Asian trading on Thursday, USD/CHF broke its two-day streak of gains. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback’s value against six other major currencies, retreated from 104.96 following the release of U.S. inflation data and is currently hovering around 104.65. USD/CHF is currently trading around 0.8930, down 0.10% on the day.
On Wednesday, data released by the U.S. Bureau of Labor Statistics showed that the overall inflation rate in August hit the highest monthly increase in 14 months, with the U.S. consumer price index rising 0.6% from the previous 0.2% monthly rate. U.S. inflation came in at an annual rate of 3.7%, above expectations of 3.2%. Core inflation, which excludes volatile food and energy prices, came in at 0.3% monthly, up from 0.2% in the previous month. Core inflation for the year was 4.3%, compared with 4.7% in the previous month.
As the market believes that the Federal Reserve will keep interest rates unchanged at next week’s decision, the dollar first rose and then fell after the release of inflation data. However, the data means the Fed will be wary of another acceleration in inflation in the coming months. Investors have put a 97% chance that the Fed will keep interest rates unchanged at 5.25%-5.50% in September. However, the odds of a Fed rate hike at the November meeting have risen to 49.2%, according to the CME FedWatch tool.
In a quiet week for Swiss economic data, market risk sentiment and US dollar dynamics will be the main drivers of USD/CHF. U.S. Commerce Secretary Gina Raimondo will meet with CEOs of major U.S. companies this week, Reuters reported on Tuesday, two weeks after her visit to China raised concerns about the business environment. Renewed US-China trade war tensions may bring some selling pressure to the US dollar and act as a headwind for USD/CHF.
Market participants will focus on Swiss August producer and import prices due later on Thursday. In addition, the number of initial jobless claims in the United States last week, the producer price index (PPI) and retail sales will remain the focus of the market. These data will provide direction for the USD/CHF pair.
