Search ForexCrunch
  • Retail sales in Switzerland declined more than expected in August.
  • US Dollar Index continues to edge higher on Tuesday.
  • The economic activity in the United States’ (US) manufacturing sector is expected to return to expansion territory.  

After gaining more than 60 pips on Monday, the USD/CHF pair preserved its bullish momentum on Tuesday and broke above the critical parity mark for the first time since mid-June. As of writing, the pair was trading at 1.0003, adding 0.25% on a daily basis.

CHF stays on the backfoot

The upbeat market mood and the prolonged USD strength seems to be fueling the pair’s rally in the first half of the week.  

Boosted by expectations of the US and China coming to terms on trade before escalating the conflict any further, the 10-year US Treasury bond yield is rising nearly 4% on the day and making it difficult for traditional safe-havens such as the JPY, gold, and CHF find demand. Meanwhile, the monthly data published by the Swiss Federal Statistical Office revealed that retail sales in Switzerland declined by 1.4% on a yearly basis in August to miss the market expectation for a decrease of 0.3%.

Additionally, the US Dollar Index, which gained 0.3% on Monday, stretched higher on Tuesday supported by rising US T-bond yields and the selling pressure surrounding the EUR and the GDP. At the moment, the index is up 0.15% on the day at 99.55, waiting for the Purchasing Managers’ Index (PMI) reports for the manufacturing sector.

The Institue for Supply Management’s (ISM) Manufacturing PMI in September is expected to rebound to 50.1 in from the disappointing reading of 49.1 in August that showed a contraction in the business activity in the sector. An upbeat reading is likely to trigger a fresh USD-buying wave and allow the pair to gather bullish momentum.

Technical levels to watch for