- USD/CHF is marching towards 1.0000 on advancing hawkish Fed bets.
- The DXY is balancing above 105.00 amid a cautious market mood.
- A continuation of an accommodative stance is expected from the SNB.
The USD/CHF pair is displaying a minor cushion around 0.9960 as oscillators turned extremely oversold on small timeframes. The pair has remained in the grip of the bulls after overstepping the consolidation formed in a 0.9880-0.9900 in Monday’s Asian session and are expected to drive the asset towards the psychological resistance of 1.0000.
A broader strength in the US dollar index (DXY) ahead of the monetary policy announcement by the Federal Reserve (Fed) has infused fresh blood into the DXY-dominating FX pairs. The DXY has established above 105.00 as a higher US Consumer Price Index (CPI) figure has bolstered the odds of a more than 50 basis points (bps) interest rate hike on Wednesday.
As per the previous testimonies from Fed chair Jerome Powell, a 75 bps rate hike is not into consideration but the release of the US inflation at 8.6% on annual basis and the upbeat Nonfarm Payrolls (NFP) have featured its expectations. No doubt, a 75 bps rate hike announcement by the Fed will underpin recession fears in the US economy as extreme liquidity shrinkage from the economy will leave the corporate with fewer corpus to invest, which will result in lower employment generation.
On the Swiss franc front, investors are awaiting the interest rate decision by the Swiss National Bank (SNB), which is due on Friday. Investors are expecting an accommodative stance from the SNB as the inflation rate is still lower than the required levels in the Swiss economy. Although the inflation rate has moved above 2% but is majorly contributed by advancing oil prices.
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