- USD/CHF is witnessing moderate and range bound price action during the European session.
- The market reacts shortly after the SNB announced its monetary policy decision on Thursday.
- Risk appetite and the Fed’s optimistic tilt supports the prospects of some near-term hike.
As of early European session, USD/CHF is trading at 0.9252 and little has changed since the Swiss National Bank (SNB) announced its monetary policy decision.
It has struggled to capitalize on the previous day’s post-FOMC bounce from 0.9215 and has traded between tepid gains and minor losses during the first half of trading action on Thursday. Following the Fed’s upbeat tone the previous day, the US dollar has retreated from one-month highs, acting as a headwind for USD/CHF.
Despite this, the prevailing risk appetite in the markets has continued to weigh on safe-haven demand for the Swiss franc and has helped limit the downside for USD/CHF. Investors were unimpressed by the SNB board’s decision to leave the monetary policy setting unchanged in the September quarter monetary policy assessment on Thursday.
In the meantime, the Fed indicated that a slowing of asset purchases may soon be warranted if the economic recovery continues broadly. In adition, Fed Chairman Jerome Powell said that asset purchases from the pandemic era may cease by mid-2022. Moreover, the dot plot showed a growing tendency to raise interest rates in 2022.
The situation should help revive USD demand and provide the basis for some near-term upside movement in USD/CHF. Therefore, any significant drop could still be viewed as a buying opportunity and remain limited. Further momentum will come from the US economic calendar, with the release of preliminary PMI and weekly jobless claims.