- USD/CHF remains firmer for the second consecutive day, picks up bids of late.
- SNB’s Zurbruegg showed readiness to intervene in FX markets, highlights importance of lower rates.
- Yields, stock futures consolidate recent losses amid mixed concerns.
- Geopolitical headlines will be important for fresh impulse, US ADP data, Fed Chair Powell’s testimony to decorate calendar.
USD/CHF stretches the previous day's rebound, mildly bid around 0.9200 heading into Wednesday’s European session.
In doing so, the Swiss currency (CHF) pair pays a little to comments from the Swiss National Bank (SNB) Vice Chairman Fritz Zurbruegg. The policymaker showed readiness to use forex markets to defend the CHF while saying, “It's important to keep lower interest rates than others to avoid excessive appreciation of the Swiss franc.” The policymaker also mentioned, “SNB will raise interest rate as soon as the situation requires it.”
The risk barometer pair’s latest run-up could be linked to the market’s cautious optimism, as portrayed by mildly bid stock futures and firmer US Treasury yields.
Having witnessed a two-day pessimism, mainly due to the Russia-Ukraine crisis, global markets consolidated the latest losses as US President Joe Biden hints at “self-reliance” and ability to fight inflation during his first State of the Union (SOTU) speech. The SOTU wasn’t all rosy as Biden also announced the ban on Russian flights from the US airspace.
Other than Biden’s SOTU, the prevalence of the Ukraine-Russia peace talks also keeps traders hopeful of a solution to the grim concern on hand. Although diplomats from Kyiv and Moscow failed to agree on Monday, the talks aren’t off the table.
Looking forward, news concerning Russia and Ukraine will be a major catalyst for USD/CHF. Also important will be Fed Chair Jerome Powell’s bi-annual testimony and the US ADP Employment Change for February.
Read: Powell Preview: Rethink because of the war? Not so fast, Fed set to remain on track, dollar to rise
Technical analysis
Double bottoms around 0.9150 join a daily closing beyond the 200-DMA to hints at the USD/CHF pair’s further recovery towards late February top near 0.9290.
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