USD/CHF hovers around 0.9780 on Fed rate hike expectations, Swiss CPI in focus

  • USD/CHF is hovering around 0.9780 ahead of the Fed’s interest rate decision.
  • The DXY slipped below 103.60 as profit booking kicks in.
  • A higher inflation reading from the SNB at 2.6% could put the SNB in ​​a slightly hawkish mood.

USD/CHF is showing a lackluster performance in the Asian session, with the asset showing back and forth movements in a narrow range of 0.9763 to 0.9783 ahead of the Federal Reserve (Fed) monetary policy Wednesday. An eight-day winning streak shows no signs of depleting the asset, which favors greenback bulls and signals more upside.

Uncertainty surrounding the Fed’s rate hike decision put the FX space on hold as market participants backed a “wait and watch” approach ahead of the monetary policy announcement. A 50 basis point (bp) interest rate hike appears imminent, as announced at the International Monetary Fund (IMF) meeting by Fed Chairman Jerome Powell last month. In addition, decades-long inflation and a tight labor market provide the conditions for a giant rate hike.

Meanwhile, the US Dollar Index (DXY) slipped firmly below 103.60 after consolidating in a minor range of 103.58-103.66. Profit booking at high levels dragged the asset lower, but broad-based strength is still intact.

On the Swiss side, investors are eyeing the publication of the consumer price index (CPI), which is to be published on Thursday. The Swiss National Bank (SNB) should sound slightly hawkish in conversations ahead as the Federal Statistical Office is expected to report annual inflation of 2.6%, up from the previous print of 2.4% .

About Meredith Campagna

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