USD/CHF consolidates above 0.9100 as investors await US Employment for further guidance

• USD/CHF is oscillating above 0.9100 as the USD Index has gauged an intermediate cushion around 104.20.
• Fed’s interest rates are already above 5% and effectively weighing on firms in augmenting fixed and working capital requirements.
• Retail demand by Swiss households has sharply contracted due to the burden of a higher cost of living.

The USD/CHF pair is demonstrating a back-and-forth action above the round-level support of 0.9100 in the Asian session. The Swiss Franc asset has turned sideways as investors are awaiting the release of the United States Employment data.

S&P500 witnessed selling pressure amid rising expectations of one more interest rate hike from the Federal Reserve (Fed). Interest rates are already above 5% and effectively weighing on firms in augmenting fixed and working capital requirements and an escalation in already restrictive policy would weigh more pressure on firms.

The US Dollar Index (DXY) displayed a vertical sell-off from 104.70 as Republican leaders are confident that the US debt-ceiling bill will get passage in Congress. This has led to a sheer decline in US Treasury yields. The yields offered on 10-year US government bonds have dropped below 3.65%.

On Thursday, US Automatic Data Processing (ADP) Employment Change (May) will remain in the spotlight. As per the expectations, the US economy added fresh 170K personnel in the labor market lower than the prior addition of 296K. Currently, labor market conditions are pretty decent and are supporting one more interest rate hike from the Fed.

Apart from the US Employment data, US ISM Manufacturing PMI (May) will be in focus. The economic data is expected to soften marginally to 47.0 vs. the former release of 47.1. While the New Orders Index that indicates forward demand is expected to drop to 44.9 from the prior release of 45.7.

On the Swiss Franc front, annual Real Retail Sales (April) contracted significantly by 3.7% while the street was anticipating a contraction of 1.4%, and previous data was contracted by 1.9%. A sharp decline in retail demand by households due to the burden of a higher cost of living could force the Swiss National Bank (SNB) to go light on interest rates.