USD/CHF edges higher toward 0.98 on robust US data

After spending the majority of the day in a relatively tight range near mid-0.97s, the USD/CHF pair gathered momentum in the early NA session and started inching closer to the 0.98 handle. As of writing, the pair was trading at 0.9782, gaining 0.3% on the day.

According to the data released by the US Department of Labor, initial claims for state unemployment benefits dropped to a seasonally adjusted rate of 260,000 from 272,000 in the previous week. Moreover, the trade deficit in the United States contracted to $42.4 billion in August from $43.6 billion in July rising exports. On the back of the robust data, the US Dollar Index gained traction and rose above the 93.50 area. 

• US: Goods & services deficit was $42.4 bln in Aug, down $1.2 billion from $43.6 billion in July
• US: Weekly initial claims was 260,000, a decrease of 12,000 from previous week

In the meantime, Philly Fed President Harker's and San Francisco Fed President Williams' comments gave an additional boost to the greenback in the session. Harker reiterated that he was in favor of a December rate hike and further added that he was expecting three more hikes in 2018. On the other hand, Williams argued that the rise seen in wages was helping to push up the inflation and said that he was expecting gradual rate hikes. The DXY jumped to a daily high at 93.70 and was last seen at 93.62, up 0.32% on the day.

• Fed’s Harker: Penciled in 3rd hike in December - CNBC

With no more significant data left in the remainder of the session, the pair could struggle to push higher as investors are likely to remain on the sidelines ahead of tomorrow's important NFP report from the U.S. "Friday's US non-farm payrolls report is expected to show that the US economy added 90,000 jobs in September, down from 156,000 in August due to disruptions caused by hurricanes in the country. The jobless rate is seen remaining steady at 4.4% in September," notes FXStreet Analyst Omkar Godbole.

Technical outlook

The immediate resistance for the pair aligns at 0.9800 (psychological level/May 29 high) ahead of 0.9850 (May 17 high) and 0.9935 (Apr. 23 high). On the downside, supports could be encountered at 0.9680 (Oct. 2 low), 0.9640/35 (100-DMA/50-DMA) and 0.9565 (Sep. 15 low).