USD/CHF remains on the defensive near 0.8800 ahead of US PPI data

• USD/CHF remains weak around 0.8810 in Thursday's early European session, down 0.15% on the day. 
• US CPI data came in softer than expected in February. 
• Traders await the US PPI inflation data, which is due later on Thursday. 

The USD/CHF pair softens to near 0.8810 during the early European session on Thursday. The fear that US President Donald Trump's protectionism will push the US economy into recession drags the US Dollar (USD) lower against the Swiss Franc (CHF). Investors will take more cues from the US February Producer Price Index (PPI) and the weekly Initial Jobless Claim, which will be released later on Thursday.

The US inflation, as measured by the Consumer Price Index (CPI), eased to 2.8% YoY in February from 3.0% in January, softer than the estimate of 2.9%, the Labor Statistics reported on Wednesday. Meanwhile, the core CPI inflation, excluding volatile food and energy categories, declined to 3.1% in February from 3.3% in the previous month. 

On a monthly basis, the headline US CPI increased 0.2% in February after a sharp 0.5% advance in January, softer than the expectation of 0.3%. The core CPI, excluding volatile food and energy categories, rose 0.2% during the same reported period versus 0.4% prior.

With the economic outlook deteriorating because of tariffs, financial markets expect the US Federal Reserve (Fed) is expected to resume cutting rates in June after it paused its easing cycle in January. This, in turn, might continue to undermine the Greenback in the near term. 

Additionally, heightened safe-haven demand amid growing concerns over global economic conditions and geopolitical tensions in the Middle East could boost the Swiss Franc (CHF) and create a headwind for USD/CHF. A Houthi spokesman said late Tuesday that they will attack any Israeli ship that violates the group's ban on Israeli ships passing through the Red and Arabian Seas, the Bab al-Mandab Strait, and the Gulf of Aden, effective immediately.