During Monday’s European session, the USD/CHF pair lingered near a six-month peak around 0.9150, propelled by a surge in the US Dollar amid escalating tensions in the Middle East and dwindling expectations of Federal Reserve (Fed) rate cuts in the near term.
S&P 500 futures registered notable gains, signaling a slight improvement in investor sentiment. However, apprehensions loom over potential retreats in risky assets following Iran’s airstrikes and concerns of retaliatory actions from Israel.
With 10-year US Treasury yields soaring to 4.55%, the Fed appears disinclined to lower interest rates amidst sustained inflationary pressures. Speculation surrounding rate cuts in the June and July meetings has waned, with market participants now eyeing potential adjustments in the September session.
The US Dollar Index (DXY) stabilized after reaching a five-month pinnacle near 106.00, with attention turning to the release of March’s Retail Sales data at 12:30 GMT. Forecasts suggest a modest growth of 0.3%, a slowdown from the previous reading of 0.6%, which could alleviate concerns regarding stubborn inflation.
Meanwhile, the Swiss Franc remained under pressure as expectations mount for the Swiss National Bank (SNB) to implement further interest rate cuts during its June meeting, prompted by inflation persistently falling below the 2% target.
Confidence in the deceleration of price pressures was reinforced by moderate growth in Swiss Producer and Import Prices in March, with monthly producer inflation advancing by 0.1%. Annually, Producer and Import prices saw a steeper contraction of 2.1% compared to the previous reading of 2.0%.
