USD/CHF OSCILLATES IN A NARROW RANGE BELOW THE 0.8600 MARK, SWISS TRADE BALANCE EYED

USD/CHF consolidates in a narrow range between 0.8585-0.8575.

Downbeat US housing data, possible more dovish policy stance from the Federal Reserve (Fed) undermine the USD.

The headline of Sino-US relations could benefit the safe-haven Swiss Franc.

Market players will focus on the Swiss Trade Balance.

The USD/CHF pair remains confined in a narrow trading band around 0.8580 during the early Asian session on Thursday. The cooling inflation data and downbeat US housing data undermine the US Dollar and act as a headwind for the USD/CHF pair.

On Wednesday, US Housing Starts fell 8% MoM in June, following a 15.7% gain (revised from 21.7%) in May and below the market consensus of a 7.2% gain. Meanwhile, Building permits declined 3.7% in June from 5.6% prior (revised).

That said, any meaningful USD rebound from its lowest level since April 2022 appears limited as market participants anticipate that the Federal Reserve (Fed) is nearing the end of its policy tightening cycle and may commit to a more dovish policy stance.

Against this backdrop, the cautious mood in the market surrounding the headline of Sino-US relations could benefit the safe-haven Swiss Franc. China's Ambassador Xie Feng criticized the US's consideration of foreign investment and AI chip restrictions. He added that China would retaliate if the US imposed more curbs on its chip sector in Beijing. The renewed tension between the world’s largest economies exerts pressure on the Greenback. This, in turn, attracts follow-through buying for the safe-haven Swiss Franc (CHF). 

Looking ahead, market players will keep an eye on the development of Sino-US relations and take cues from the Swiss Trade Balance figure later in the day. The data could be a decisive key driver for the Swiss Franc and help determine the next direction for the USD/CHF pair.