USD/CHF oscillates around 0.9880, focus shifts to Fed and SNB
|- USD/CHF is trading lackluster as investors await interest rate policy from the Fed and the SNB,
- The Fed is expected to sound extremely hawkish amid higher inflation.
- The SNB is expected to end its prudent monetary policy stance.
The USD/CHF pair is displaying back and forth moves in a narrow range of 0.9875-0.9893 in the early Tokyo session. The major displayed a juggernaut rally on Friday after sensing significant bids from 0.9766. A firmer responsive buying action was backed by soaring US inflation numbers.
The US Consumer Price Index (CPI) landed at 8.6%, vs. 8.3% as expected, and also the former figure on annual basis. While, the core CPI landed at 6%, higher than the forecasts of 5.9%. This has cleared the fact that higher food and energy prices are driving the price pressures and are required to tame sooner to safeguard the wallets of households from depreciation.
Therefore, the Federal Reserve (Fed) is expected to come forward with a higher rate hike announcement. Considering the tight labor market in the US and soaring inflationary pressures, the Fed is required to paddle up to their interest rates vigorously. The expectations of a 75 basis point (bps) rate hike are getting much air.
On the Swiss franc front, investors are awaiting the interest rate decision by the Swiss National Bank (SNB), which is due on Friday. The Swiss CPI has climbed above 2% in May, which could pause the SNB to continue with a neutral stance. However, a report from Citibank states that the Swiss central bank could raise interest rates next week”.
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