Trending
usdchf
Source: Newsmaker.id
The USD/CHF pair weakened for the third consecutive day, trading around 0.8230 during the Asian session on Thursday (October 22). The pressure stems from a US dollar grappling with signs of economic softening, following recent data that revealed a decline in US housing activity and a drop in pending home sales to an all-time low.
Regarding monetary policy, the market anticipates that the Federal Reserve will keep interest rates unchanged at next week’s meeting. According to the CME FedWatch tool, there is an approximately 84% probability that rates will remain on hold, while the likelihood of a hike in December stands at around 90%. A cautious stance from Fed officials has left the market without a clear signal regarding the central bank's next move.
However, any potential decline in USD/CHF could be tempered if oil prices continue to rise. Drone attacks on Saudi Aramco’s Shaybah oil field, alongside strikes on Russian energy infrastructure, have heightened concerns over supply disruptions. Such developments could fuel global inflation and reinforce expectations that the Federal Reserve may need to maintain a tight monetary policy.
Meanwhile, the Swiss franc faces pressure due to a significant interest rate differential with the United States. Switzerland’s relatively low interest rates make the franc an attractive funding currency for "carry trade" strategies; investors tend to borrow in Swiss francs to invest in higher-yielding assets, which limits the potential for the franc to strengthen.
Newsmaker Analysis: The USD/CHF pair is currently caught in a tug-of-war between a weakening US economy and pressures weighing on the Swiss franc. Should US data continue to deteriorate and expectations for a Federal Reserve rate hike diminish, the pair could see further declines. Conversely, a surge in oil prices—triggering inflationary concerns—could bolster the US dollar and curb any further weakness in the USD/CHF pair. (srh)
Source: Newsmaker.id