USD/CHF drops to new daily lows near 0.9920 on dismal PMI readings

• US Dollar Index fails to stay in the positive territory, falls toward 95.
• Nonfarm employment growth  falls short of market expectations.
• Trade fears ramp up the demand for safe-havens.

Following the initial fall to 0.9930 in the early NA session, the USD/CHF recovered to mid-0.99s but struggled to extend its upside as the greenback came under a renewed selling pressure. At the moment the pair is trading at 0.9923, losing 0.3% on the day.

The data from the U.S. on Friday showed that nonfarm payrolls increased by 157K in  July compared to analysts’ estimate of 190K. On a positive note, the unemployment rate fell to  3.9% and the annual wage inflation remained steady at 2.7%. After dropping toward the 95 handle, the US Dollar Index rose back above 95.20 and turned positive on the day but failed to stay there as the PMI data released by both the ISM and Markit showed that the business activity in the service sector expanded at a slower-than-expected pace in July. At the moment, the DXY is down 0.15% on the day at 95.02.

In the meantime, China announced new import tariffs ranging from 5% to 25% on $60 billion worth of U.S. goods reviving the trade concerns. Reflecting the negative market sentiment, safe-havens such as the CHF and the JPY continued to gather strength against the buck. Furthermore, higher demand for safer US T-bonds weighed on the yields of the 10-year references, which was last seen down 1.1% at 2.95%.

Technical outlook

The pair could face the first support at 0.9900 (100-DMA) ahead of 0.9865 (Jul. 31 low) and 0.9785 (Jun. 7 low). On the upside, resistances align at 0.9950 (20-DMA), 1.0000 (psychological level) and 1.0065 (Jul. 13 high).