USD/CHF faces heat above 0.9200 as risk-off impulse eases, hawkish Fed bets soar

The USD/CHF pair is facing barricades in overstepping the immediate resistance of 0.9210 in the Asian session. The Swiss franc asset has gradually crossed the round-level resistance of 0.9200 but is struggling to extend gains further as the risk appetite of the market participants is improving again.

S&P500 futures have picked up some demand in the Asian session after a negative Wednesday. A recovery move in the 500-US stocks basket is indicating ease in the risk-off market mood. Also, investors are ignoring the proposal of quadrupling the corporate buyback tax on billionaires. Adding to that, the US Treasury yields have dropped firmly despite hawkish policy stances by various Federal Reserve (Fed) policymakers. The yields generated by the 10-year US government bonds have dropped to near 3.60%.

The US Dollar Index (DXY) is working hard to sustain above the critical resistance of 103.00. The upside in the USD Index seems solid as the Fed is aiming to keep interest rates higher for a longer period than earlier anticipated. Despite confirming the fact that the disinflationary process is active in the United States by Fed chairs Jerome Powell, further hiking in interest rates cannot be ruled out.

A strong labor market in the United States is expected to propel the employment cost index as the shortage of labor will be augmented by higher employment proposals from firms. This could trigger a rebound in the inflation projections as households with higher earnings in possession can lead to higher consumer spending.

On the Swiss franc front, the odds of a continuation of the interest rate hike spell by the Swiss National Bank (SNB) are gathering strength. SNB Chairman Thomas J. Jordan cited that the inflationary pressures are beyond the control of the central bank, which bolsters the case of further policy tightening.