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USD/CHF auctions on thin ice around 0.9340 as investors await US CPI

  • USD/CHF has continued to remain sideways around 0.9340 ahead of Fed/SNB monetary policy.
  • Investors expect a surprise move in November’s US Inflation report.
  • The SNB is expected to continue its hawkish policy as the current monetary policy is unable to tackle inflation.

The USD/CHF pair has continued its sideways performance, settled on Friday, in the early Tokyo session as investors are awaiting the announcement of the United States Consumer Price Index (CPI) data for fresh impetus.

The Swiss franc asset is displaying topsy-turvy moves in a 0.9320-0.9380 range amid mixed responses from the risk profile. Pre-Federal Reserve (Fed) policy anxiety is turning the market mood cautious while the expectation of a deceleration in the pace of the interest rate hike by the Federal Open Market Committee (FOMC) is providing a cushion to the risk appetite theme.

S&P500 ended the week on a bearish note, reported risk aversion theme by the market participants. Meanwhile, the US Dollar Index (DXY) is struggling around 105.00 as investors expect a surprise deviation in November’s inflation report. The release of the headline US Producer Price Index (PPI) matched expectations after declining to 7.4% and has raised hopes for a decline in inflation, however, the upbeat November employment report is calling for a surprise rebound in the price pressures.

This week, the show-stopper event will be the interest rate decision by the Fed, which is scheduled for Wednesday. Rabobank analysts said they expect the US central bank to hike the policy rate by 50 basis points and see policymakers revising the terminal rate projection to the neighborhood of 5%.

On the Swiss franc front, the monetary policy meeting of the Swiss National Bank (SNB) will be of utmost importance. A commentary from SNB Chairman Thomas J. Jordan stating that their current monetary policy is too loose to tackle inflation, reported by Reuters, cements expectations for a hawkish monetary policy.