USD/CHF recovers its losses near 0.8800 ahead of US PMI

• USD/CHF gains momentum near 0.8802 ahead of the US S&P Global PMI data.
• US Existing Home Sales in July were marginally lower than anticipated, Richmond Fed's Manufacturing Index fell to -7 from -9.
• Swiss Trade Balance narrowed to 3,129M against the market consensus of 4,300 M.
• Market players await Jackson Hole's annual symposium, Fed Chair Powell's speech.

The USD/CHF pair recovers its recent loss and reclaims the 0.8800 area during the early Asian session on Wednesday. Meanwhile, the US Dollar Index (DXY), a measure of the value of USD against six other major currencies, bounces off the weekly low of 103.01 and hovers around 103.60. The US 10-year yield climbs above 4.30%, marking a new multi-year high.

On Tuesday, the US Existing Home Sales Change fell 2.2% in July, compared to a 3.3% decline in June. Meanwhile, Existing Home Sales in July were marginally lower than anticipated, coming in at 4.07M compared to 4.15M expected and 4.16M in the previous month. The Richmond Fed Manufacturing Index for August decreased from -9 to -7, in accordance with market expectations.

Along with the stronger US data, Federal Reserve Bank of Richmond President Thomas Barkin's hawkish comments on Tuesday supports the Dollar's recovery. Barkin stated that monetary policy would have to be tightened if inflation remained elevated and there were no indications that demand would decrease.

The Swiss Federal Customs Administration reported on Tuesday that the country’s Trade Balance narrowed to 3,129M against the market consensus of 4,300M. Meanwhile, Exports were down 16.7% in July. In the same period, Imports dropped by 12.5%. The Swiss franc weakened against its rivals in response to the weaker data.

Furthermore, the US Commerce Department’s statement reported late Tuesday that US Commerce Secretary Gina Raimondo met the Chinese ambassador Xie Feng, and had a productive discussion before her departure to China, according to Reuters. Market participants will keep an eye on the prospects for collaboration between the two countries. The renewed tension between the US-China could benefit the traditional safe-haven Swiss France and acts as a headwind for the USD/CHF pair.

In the absence of any relevant market-moving economic releases from Switzerland, the USD/CHF pair remains at the mercy of USD price dynamics. Market players await the US S&P Global PMI data due later in the day. The highlight of the week will be Jackson Hole annual symposium on Thursday and Fed Chair Powell's speech on Friday. The events could offer hints for further monetary policy. Investors now expect the Fed to pause interest rates in September and bet on a 25 basis point (bps) rate hike in its November meeting.