USD/CHF wobbles above 0.8000 with trade fears looming

• The US edges higher above 0.8000 with market sentiment frail.
• The Greenback lost about 1% on Friday after Trump threatened 100% tariffs on China.
• In Switzerland, all eyes will be on the Producer and Import Prices release, due on Tuesday.
  

The US Dollar is hesitating right above the 0.8000 line against the Swiss Franc on Monday, with investors wary that the trade rift between the US and China might lead to a full-blown trade war.

US President Trump soothed investors on Sunday by easing his tone against China in a social media post that aims to cool off tensions. Investors, however, remain reluctant to take risks, which leaves the pair looking for direction, following a nearly 1% sell-off on Friday.

Trade war fears keep Dollar rallies limited

US President Trump shocked markets on Friday, announcing 100% additional tariffs on Chinese imports, which brought back fears of the "Liberation Day" and crushed risk appetite, sending the US Dollar lower across the board.

Chinese authorities defended the restriction of rare earths' exports and affirmed that they were introduced in the trade talks with the US last month, adding that they do not fear a trade war and that they will retaliate to higher US tariffs.

The broader USD/CHF trend remains positive from mid-September lows, but concerns about further trade uncertainty, added to an extended US Government shutdown, might dent the US Dollar's recovery. 

In Switzerland, the focus this week will be on September Producer and Import Prices, which are expected to have bounced up after four consecutive months of contraction. The Swiss Franc needs a clear rebound on price pressures to ease concerns about deflation, which keeps pressuring the SNB to cut interest rates into negative levels.