- USD/CHF is oscillating above 0.9100 as the USD Index has gauged an intermediate cushion around 104.20.
- Fed’s interest rates are already above 5% and effectively weighing on firms in augmenting fixed and working capital requirements.
- Retail demand by Swiss households has sharply contracted due to the burden of a higher cost of living.
The USD/CHF pair is demonstrating a back-and-forth action above the round-level support of 0.9100 in the Asian session. The Swiss Franc asset has turned sideways as investors are awaiting the release of the United States Employment data.
S&P500 witnessed selling pressure amid rising expectations of one more interest rate hike from the Federal Reserve (Fed). Interest rates are already above 5% and effectively weighing on firms in augmenting fixed and working capital requirements and an escalation in already restrictive policy would weigh more pressure on firms.
The US Dollar Index (DXY) displayed a vertical sell-off from 104.70 as Republican leaders are confident that the US debt-ceiling bill will get passage in Congress. This has led to a sheer decline in US Treasury yields. The yields offered on 10-year US government bonds have dropped below 3.65%.
On Thursday, US Automatic Data Processing (ADP) Employment Change (May) will remain in the spotlight. As per the expectations, the US economy added fresh 170K personnel in the labor market lower than the prior addition of 296K. Currently, labor market conditions are pretty decent and are supporting one more interest rate hike from the Fed.
Apart from the US Employment data, US ISM Manufacturing PMI (May) will be in focus. The economic data is expected to soften marginally to 47.0 vs. the former release of 47.1. While the New Orders Index that indicates forward demand is expected to drop to 44.9 from the prior release of 45.7.
On the Swiss Franc front, annual Real Retail Sales (April) contracted significantly by 3.7% while the street was anticipating a contraction of 1.4%, and previous data was contracted by 1.9%. A sharp decline in retail demand by households due to the burden of a higher cost of living could force the Swiss National Bank (SNB) to go light on interest rates.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD drops below 1.0500 after US inflation data
EUR/USD stays under pressure and trades below 1.0500 in the American session on Wednesday. The US Dollar stays resilient against its rivals after the data showed that the annual CPI inflation edged higher to 2.7% in November, not allowing the pair to stage a rebound.
Gold extends rally above $2,700
Gold preserves its bullish momentum and trades above $2,700 for the first time in two weeks. Investors fully price in a 25 basis points Fed rate cut in December following the November inflation data from the US, boosting XAU/USD.
BTC faces setback from Microsoft’s rejection
Bitcoin price hovers around $98,400 on Wednesday after declining 4.47% since Monday. Microsoft shareholders rejected the proposal to add Bitcoin to the company’s balance sheet on Tuesday.
Why is the ECB set to cut interest rates again and what does that mean Premium
The ECB is widely expected to cut interest rates on Thursday for the fourth time this year. This is a significant achievement as it suggests that the ECB, which sets monetary policy in the Eurozone, is accelerating its path towards lower interest rates after an unprecedented increase.
GBP/USD drops below 1.2750, awaits US inflation data
GBP/USD is back in the red below 1.2750 in European trading on Wednesday. The Pound Sterling loses traction amid renewed US Dollar buying as risk sentiment worsens heading into the key US CPI showdown. The US inflation data is key to gauging the pace of Fed's future rate cuts.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.