USD/CHF RECOVERY CAPPED AROUND 0.9200 ON SLUGGISH SENTIMENT, US RETAIL SALES IN FOCUS

• USD/CHF seesaws around intraday top after snapping two-day downtrend.
• Market sentiment dwindles amid mixed catalysts, pre-Fed anxiety.
• US consumer-centric data and risk catalysts to direct traders ahead of next week’s FOMC, tapering is the key.

USD/CHF eases from intraday high to 0.9200 but stays positive for the first time in three days as European traders brace for Thursday’s work.

The risk barometer pair struggles for a clear direction, like the markets, amid mixed signals concerning the US Federal Reserve’s (Fed) next move.

Adding to the confusion is the latest trilateral defense pact amid the US, Australia and the UK, as well as fears that the Western allies are forming a group versus China.

Although softer-than-expected US Consumer Price Index (CPI) for August shrugged off Fed tapering chatters and favored risk appetite, firmer prints of NY Empire State Manufacturing Index for September join the last Fedspeak that backed taper tantrum to weigh on the sentiment.

Australia’s security pact with the UK and the US, availing nuclear-powered submarines, signals a further worsening of relations with China and weighed on market sentiment earlier in the day. Further, higher virus infections in Australia, China and New Zealand also challenge the risk appetite. Additionally, the US adds the UK to its welcome list for the next week’s diplomatic talks in the White House and amplifies market fears that the Western friends are again gearing up for a battle with China, which in turn heavy the sentiment.

Against this backdrop, stock futures reverse early Asian gains while the US Dollar Index (DXY) picks up bids to print mild intraday gains. The US 10-year Treasury yields portray the market’s indecision around 1.297% at the latest.

Given the pre-data cautious mood and mixed sentiment, USD/CHF buyers need easy US Retail Sales numbers to keep the latest rebound.

Read: US August Retail Sales Preview: Can gold turn bullish on a weak print?