USD/CHF trades in tight range near 0.99 as focus shifts to FOMC
- US Dollar Index continues to move sideways above 98.
- US 10-year Treasury bond yield posts small losses on Wednesday.
- FOMC is widely expected to cut its policy rate by 25 basis points.
The USD/CHF pair, which closed the first two trading days of the week in the negative territory, is moving sideways near the 0.99 on Wednesday as investors are waiting for the announcements that will come out of the 2-day FOMC meeting. As of writing, the pair was virtually unchanged on a daily basis at 0.9902.
Ahead of this crucial event, the market sentiment stays neutral, failing to provide a directional clue to the pair. While the 10-year US Treasury bond yield is down 0.5% on the day, the S&P 500 Futures is up 0.2%, suggesting that Wall Street could start the day modestly higher.
Markets on pause ahead of Fed
According to Rabobank analysts, the FOMC is set to make an "insurance cut" of 25 basis point at the July meeting. "However, we think that a larger cut, more specifically 50 bps, is unlikely. After all, the Fed sees a cut to the target range at this point as an insurance cut, instead of part of a full-blown cutting cycle. This means that they do not think that the economy is falling off a cliff in the near-term,” analysts added.
Ahead of the FOMC, the ADP private-sector employment data from the US will be released as well but is unlikely to have a lasting impact on the markets.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
