The Swiss franc is down sharply on Tuesday, with USD/CHF climbing above the 92 line for the first time in two weeks. In the North American session, USD/CHF is trading at 0.9184, up 0.58% on the day. Investors will be keeping an eye on Swiss Economic Expectations which will be released on Wednesday. After a dismal reading of -10.8 in November, we may see a rebound in the December data.
Swiss franc down sharply
The Swiss franc kicked off the New Year with sharp losses, and the currency has been marked by considerable volatility in January. The US dollar has risen against the major currencies this week, with the exception of the Japanese yen. The Swiss franc is a traditional safe-haven asset, but with tensions at a fever pitch on the Ukraine-Russia border and stocks market falling, jittery investors have been seeking safety with the US dollar.
US stock markets have been dropping and that has been sweet news for the US dollar. All three major US futures indices were down on Tuesday, as earnings have disappointed and the Fed is set to embark on at least four rate hikes this year. If the selloff continues on Wall Street today, the US dollar could add more gains.
The markets are anxiously awaiting the FOMC meeting on Wednesday, with the Fed set to embark on a series of rate hikes throughout 2022 and possibly into 2023 as well. The likelihood of a hike in March stands at 94%, according to FedWatch.
There has also been some speculation that the Fed might depart from incremental hikes of 0.25% and announce a dramatic 0.50% move. This would show that the Fed is serious about curbing inflation and help restore credibility after the Fed stuck to its script that inflation was transitory for far too long.
- USD/CHF is testing resistance at 0.9165. Above, there is resistance at 0.9210
- There is support at 90.92 and 90.64
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