During the early European trading hours on Tuesday, the USD/CHF pair staged a recovery, hovering near 0.9120, reclaiming ground lost in the preceding session. The resurgence is chiefly attributed to the robust performance of the US Dollar (USD), underpinned by encouraging Retail Sales figures from the United States (US). Market sentiment is bolstered by the prospect of prolonged higher interest rates by the Federal Reserve (Fed).
The US Dollar Index (DXY) extended its advance to approximately 106.30, while yields on US Treasury bonds for the 2-year and 10-year tenors stood at 4.93% and 4.62%, respectively, at the time of reporting. Heightened geopolitical tensions in the Middle East have propelled investors towards the safe-haven appeal of the US Dollar (USD).
Federal Reserve (Fed) Bank of San Francisco President Mary Daly emphasized on Monday that despite notable progress on inflation, caution is warranted, stressing the need for confidence in the trajectory towards the inflation target before considering policy adjustments.
Conversely, Swiss economic indicators present a mixed picture. While Swiss Producer and Import Prices (MoM) demonstrated modest growth of 0.1% in March, the yearly metric witnessed a contraction of 2.1%, slightly deepening from the previous reading of 2.0%.
The Swiss Franc (CHF) has endured significant depreciation since the surprise rate cut by the Swiss National Bank (SNB) in March. With inflation exhibiting moderation and business sentiment lingering in pessimistic territory, speculation mounts regarding the possibility of another rate reduction during the SNB’s forthcoming June meeting.
