USD/CHF Corrects as US Dollar Retreats, Eyes on SNB Policy
USD/CHF corrected to around 0.7910 during the Asian session on Thursday after strengthening the previous day, as the US dollar retreated slightly. The dollar index (DXY) fell 0.14% and hovered near 100.00, reflecting a consolidation phase after the market digested the Federal Reserve's policy decision.
Despite the correction, the USD/CHF bias remained relatively intact as the market increasingly considers the scenario of US interest rates remaining high for longer. The Fed held interest rates at 3.50%–3.75% for the second consecutive meeting and emphasized that policy adjustments were not yet appropriate amid rising inflation risks. Fed Chairman Jerome Powell also stated that it was too early to assess the impact of the surge in oil prices on the economy, but emphasized that the central bank was ready to take necessary steps if price pressures worsened.
In Switzerland, market attention shifted to the Swiss National Bank (SNB) decision at 3:30 PM WIB. The CHF briefly gained support as a safe-haven asset, but its performance was relatively subdued ahead of the SNB meeting. The broader market expects the SNB to maintain its dovish stance by holding interest rates at 0%, while maintaining the option of intervention if the franc's strength is deemed excessive and risks triggering deflationary pressures.
For USD/CHF, the next direction will be largely determined by a combination of two factors: whether the Fed maintains its "tighter for longer" tone amid energy inflation risks, and whether the SNB sends a strong signal regarding intervention or deflationary concerns. If the SNB sounds very dovish, the CHF could be subdued and USD/CHF could stabilize; conversely, if the SNB signals no intervention and risk-off sentiment intensifies, the CHF could strengthen again as a safe haven.
What market participants need to monitor:
SNB's tone on the franc, deflation, and intervention (the main triggers for the CHF).
DXY reaction and US Treasury yields post-Fed.
Oil movements and geopolitical headlines that could shift risk-on/risk-off sentiment.(CP)
Source: Newsmaker.id
