USD/CHF rebounds from 0.9960 as focus shifts to US Inflation

  • USD/CHF has picked bids at around 0.9962 as US inflation data hogs the limelight.
  • The DXY remained sideways despite the hawkish Fed minutes and mixed PPI data.
  • Investors should brace for sheer volatility on the US inflation release.

The USD/CHF pair has sensed a fresh demand from around 0.9960, however, further upside needs to pass a lot of tests ahead. As the risk impulse is displaying mixed responses ahead of the US Consumer Price Index (CPI) data, a restrictive movement is getting more traction. On Wednesday, S&P500 faded the opening optimism after settling sluggish as the inflation report is a key trigger for decisive action.

Meanwhile, the US dollar index (DXY) is still inside the woods as volatility has contracted dramatically. Wednesday’s release of the Producer Price Index (PPI) failed to impact the DXY. The headline annual PPI figure improved by 10 basis points (bps) to 8.5% against projections. While the core PPI figure declined to 7.2% vs. the expectations and the prior release of 7.3%.

Apart from that, the release of the Federal Reserve (Fed) minutes has cleared that policymakers believe in staying with the current course of action. To bring price stability, reaching faster terminal rates and the sustainability of tight monetary policy is the remedy to curtail soaring inflation despite the sacrifice of a tight labor market.

Going forward, the US Consumer Price Index (CPI) data holds the utmost importance. The plain-vanilla CPI is expected to decline to 8.1% while the core CPI may improve to 6.5%. Apart from that, the quarterly result season is at the doors. Therefore, the deadly duo will accelerate volatility in the market.

On the Swiss franc front, Swiss National Bank (SNB) Chairman Thomas J. Jordan at the IMF meeting in Washington cited that the central bank has a clear focus on bringing price stability back to the target by tightening the financial conditions, reported Bloomberg.

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