USD/CHF retakes 0.9300 mark amid modest USD strength, risk-off mood likely to cap gains – by hareshmenghani USDCHF RiskAversion Fed Bonds Currencies
early European session. The pair, for now, seems to have snapped a two-day losing streak and looks to build on the momentum beyond the 0.9300 mark.
The US Dollar advances slightly on Monday and acts as a tailwind for the USD/CHF pair, though a combination of factors might hold back bulls from placing aggressive bets and keeps a lid on any meaningful upside. The prevalent risk-off environment is seen lending some support to the safe-haven Swiss Franc . Apart from this, diminishing odds for a more aggressive policy tightening by the Federal Reserve further contribute to capping gains for the major, at least for the time being.
Despite the recent emergency liquidity measures and multi-billion-dollar lifelines for troubled US and European banks, concerns about the contagion risk and the possibility of a full-blown global banking crisis showed little signs of subsiding. Apart from this, looming recession risks take a toll on the global risk sentiment, which is evident from an extended sell-off across the equity markets.
The recent developments, meanwhile, fuel speculations that the US central bank will soften its hawkish rhetoric to prevent any further economic pressure from high-interest rates. In fact, the markets are now pricing in a smaller 25 bps lift-off at this week's FOMC meeting, starting on Tuesday, and thewill cut rates during the second half of the year. This is reinforced by a further steep decline in the US Treasury bond yields, which caps gains for Greenback and the USD/CHF pair.
Traders also seem reluctant and prefer to move to the sidelines ahead of this week's key central bank event risks - the outcome of the highly-anticipated FOMC meeting on Wednesday, followed by the Swiss National meeting on Thursday.
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