USD/CHF corrects slightly to near 0.7910 as US Dollar retraces, SNB policy eyed

USD/CHF retraces to near 0.7910 as the US Dollar corrects, outlook remains firm.
The Fed left interest rates unchanged on Wednesday, citing upside inflation risks.
Investors expect the SNB to hold interest rates at 0% again.

Sagar Dua FXStreet

The USD/CHF pair retraces to near 0.7910 during the Asian trading session on Thursday, following a strong Wednesday. The Swiss Franc pair faces slight selling pressure as the US Dollar (USD) corrects, but is broadly upbeat, as speculation that the Federal Reserve (Fed) will not cut interest rates in the entire year has intensified.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.14% lower to near 100.00.

According to the CME FedWatch tool, the odds of the Fed holding interest rates steady in the current range of 3.50%-3.75% by the year-end are 55.2%.

Dovish Fed bets have accelerated after the Fed’s monetary policy announcement on Wednesday, in which it left interest rates unchanged for the second time in a row, as expected, and signaled that monetary policy adjustments are inappropriate amid upside inflation risks.

Regarding de-anchored inflation expectations due to surging oil prices amid conflicts in the Middle East, Fed Chair Jerome Powell indicated that it is premature to gauge the impact on prices and the economy; however, the Fed is prepared to do what needs to be done", Reuters reported.

Though investors have underpinned the Swiss Franc (CHF) against the US Dollar, the former underperforms its other peers ahead of the Swiss National Bank’s (SNB) monetary policy announcement at 08:30 GMT. The SNB is expected to maintain its dovish stance by leaving interest rates unchanged at 0%.

Swiss Franc Price Today

The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies today. Swiss Franc was the weakest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.21%	-0.20%	-0.16%	-0.04%	-0.34%	-0.41%	-0.14%
EUR	0.21%		0.00%	0.04%	0.16%	-0.13%	-0.21%	0.06%
GBP	0.20%	-0.01%		0.02%	0.16%	-0.14%	-0.21%	0.04%
JPY	0.16%	-0.04%	-0.02%		0.12%	-0.18%	-0.28%	0.03%
CAD	0.04%	-0.16%	-0.16%	-0.12%		-0.29%	-0.38%	-0.11%
AUD	0.34%	0.13%	0.14%	0.18%	0.29%		-0.09%	0.18%
NZD	0.41%	0.21%	0.21%	0.28%	0.38%	0.09%		0.26%
CHF	0.14%	-0.06%	-0.04%	-0.03%	0.11%	-0.18%	-0.26%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).

Investors would pay close attention to comments regarding whether the SNB intends to shift to negative interest rates in the near term and are there any plans of intervention to ease excessive appreciation of the Swiss Franc.

“We are ready to intervene in the foreign exchange market to dampen a rapid and excessive appreciation of the Swiss Franc,” SNB said earlier this month.

Economic Indicator

SNB Interest Rate Decision

The Swiss National Bank (SNB) announces its interest rate decision after each of the Bank’s four scheduled annual meetings, one per quarter. Generally, if the SNB is hawkish about the inflation outlook of the economy and raises interest rates, it is bullish for the Swiss Franc (CHF). Likewise, if the SNB has a dovish view on the economy and keeps interest rates unchanged, or cuts them, it is usually bearish for CHF.

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