The USD/CHF currency pair has rallied to its highest level in two weeks, reaching close to 0.8710 in the early hours of Friday’s European session. This surge comes as the Swiss Franc (CHF) celebrates improved Real Retail Sales growth of 1.8% YoY in June, a significant improvement from the previous 0.9% contraction. The positive data bolsters the Swiss National Bank’s (SNB) hawkish stance.

On the other side, the US Dollar has been gaining strength, supported by upbeat economic data. The US Gross Domestic Product (GDP) for the second quarter (Q2) and Durable Goods orders for June both exceeded expectations, renewing calls for a potential Federal Reserve (Fed) rate hike in September. Consequently, despite the Swiss Franc’s recent momentum, the US Dollar remains resilient.

The market sentiment appears cautiously optimistic, reflected in mildly bid US and European stock futures, leading the US Dollar Index (DXY) to a three-week high. The previous day saw the greenback’s gauge against six major currencies post its most substantial rally in four months, further driving the USD/CHF pair’s climb from its multi-year low.

Earlier in the week, the Fed’s efforts to convince hawks with a 0.25% rate hike and readiness for a potential September rate increase did not yield the desired results, dampening the US Dollar before its recent resurgence.

Looking ahead, the economic calendar is relatively light, but traders remain cautious ahead of the Fed’s favored inflation gauge, the Core Personal Consumption Expenditure (PCE) Price Index for June, which is expected to show a 4.2% YoY increase compared to the previous 4.6%. The outcome of the US inflation data will likely influence the USD/CHF pair, potentially extending its recent rebound from the multi-year low.


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