USD/CHF remains below 0.8850 despite downbeat Swiss GDP amid US-China tension
- USD/CHF trades lower around 0.8830 in the face of disappointing Swiss GDP.
- US and China trade tension could favor the safe-haven Swiss Franc (CHF).
- US weak employment data exerted pressure on the US Dollar (USD); traders seek more cues on Fed policy.
USD/CHF snaps the two-day winning streak, trading lower around 0.8830 during the early trading hours in the European session on Monday. The Swiss Franc (CHF) is experiencing upward support despite Switzerland’s downbeat Gross Domestic Product (GDP) (QoQ) for the second quarter.
The Swiss GDP declined to 0.0% against the market consensus of 0.1%, which was reported at 0.3% in the previous quarter. Additionally, the modest data from the United States (US) is exerting downward pressure on the USD/CHF pair, as it reinforces the likelihood of no interest rate adjustment by the US Federal Reserve (Fed) in the September meeting.
Furthermore, the renewed trade tensions between the US and China could potentially favor the traditional safe-haven Swiss Franc (CHF) and pose a challenge for the USD/CHF pair. On Sunday, US Commerce Secretary Gina Raimondo emphasized that there are "legitimate concerns" regarding Chinese investments in the United States. Raimondo also underscored the necessity of taking robust measures to safeguard the nation's national security.
During the China International Fair for Trade in Services (CIFTIS) in Beijing, Chinese President Xi Jinping announced that China would promote the integrated growth of high-end manufacturing and modern service industries, as reported by Reuters.
However, the downward trajectory of the USD/CHF pair may be restrained as investors are still factoring in the probability of a quarter basis points (bps) rate hike by the Fed. This anticipation continues to provide support for the USD/CHF pair, curbing its potential losses.
US Dollar Index (DXY), which measures the performance of the Greenback against six other major currencies, retreating from the recent gains. Spot prices are beating lower around 104.10 at the time of writing. As mentioned earlier, the US downbeat employment data weighed on the greenback. Even so, the improved yields on US Treasury bonds exerted upward support to the US Dollar (USD), which closed the previous week at 4.18%.
US Nonfarm Payrolls data showed improvement in August, with a reading of 187,000, higher than the market consensus of 170,000 and the previous reading of 157,000. Average Hourly Earnings (Aug) declined to the rate of 4.3%, which was anticipated to remain consistent at 4.4% prior.