- USD/CHF is aiming to reclaim the 0.9200 resistance amid a firm recovery by the USD Index.
- Expansion of financial support to US lenders and upbeat US PMI strengthened the US Dollar appeal.
- The SNB is ready to tighten monetary policy further if inflation continues to remain persistent.
The USD/CHF pair is aiming to recapture the immediate resistance of 0.9200 in the early Asian session. The Swiss franc asset is being supported by a recovery in the US Dollar Index (DXY). Easing United States banking fears and solid preliminary US Global PMI (March) bolstered confidence for the USD Index last week.
Bloomberg reported on Saturday the U.S. authorities are considering the expansion of an emergency lending facility that would offer banks more support, in an effort that could give First Republic Bank more time to shore up its balance sheet. The expression of further support to lenders to dodge vulnerable times infuses confidence among investors.
S&P500 futures ended the week on a promising note as more support to lenders would also result in more deposits to mid-size US banks, which have dropped firmly after their debacle, portraying an improvement in investors’ risk appetite.
Reuters reported on Friday that the data from Federal Reserve (Fed) shows that deposits at small U.S. banks dropped by a record amount following the collapse of Silicon Valley Bank (SVB). Now wider blanket of support to US mid-size banks might provide support to US mid-side banks in the longer term.
The US Dollar Index (DXY) was supported by solid S&P Global PMI data. Manufacturing PMI is still in the declining phase as a figure below 50.0 is considered as contracting. Although the figure rebounded firmly to 49.3 from the consensus of 47.0. Also, Services PMI accelerated to 53.8 against the estimates of 50.5 and the prior release of 50.6.
On the Swiss franc front, an interest rate hike by 50 basis points (bps) by the Swiss National Bank (SNB) to tackle galloping inflation has trimmed Fed-SNB rate divergence. SNB Chairman Thomas J. Jordan cited that the central bank is ready to hike rates further if inflation continues to remain persistent.
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