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  • Swiss franc losses momentum amid improvement in risk sentiment.  
  • DXY up 0.41% but US Dollar drops against commodity currencies.  

The USD/CHF pair is hovering slightly below 0.9800, consolidating modest daily gains. It opened the week with a bearish gap but rebounded to the upside following the recovery in equity markets around the globe.  

Following risk appetite  

The Swiss franc continues to be guided by risk sentiment. It opened the week higher across the board following the escalation in trade tensions between the US and China. USD/CHF bottomed a 0.9711 the lowest level in ten days. It then bounced to the upside, rising a hundred pips, amid an improvement in risk sentiment as US and Chinese leaders spoke about starting negotiations again. The bounce from the lows found resistance around at 0.9800 area that capped the upside.  

Data from the US was mostly ignored today by market participants. “Mixed economic indicators in the U.S: the Chicago Fed National Activity Index dropped more than estimated in July (-0,36, 0.0 expected, 0.03 prior), suggesting that its economy is experiencing below-average growth. Nonetheless, the Dallas Fed suggested that the sentiment among manufacturers in Texas improved in August, exceeding estimates (2.7, -4.0 expected, -6.3 prior). On the other hand, U.S. durable goods, excluding transportation, worsened unexpectedly in July (-0.4%, 0.0% expected, 0.8% prior). However, including aircraft and other transportation equipment, the indicator rose ahead of economists’ projections in July (2.1%, 1.2% expected, 1.8% prior),” explained BBVA analysts.  

The pair is about to end the day far from the lows but under the 20-day moving average (0.9795) and on top of the 0.9770 resistance area. It has recovered half of Friday’s losses. Ahead of the Asian session, the bullish momentum evaporated, but if it breaks above 0.9810 it would again gain strength. On the flip side, under 0.9770 the bearish pressure will likely intensify.