Solid Gold Berjangka – The USD/CHF pair strengthened, hovering around 0.8280 during Tuesday’s Asian trading session (October 27), extending gains following a two-day upward trend. Movement in the currency pair remained relatively contained as investors adopted a cautious stance ahead of the Federal Reserve’s (The Fed) interest rate decision on Wednesday.
The market anticipates that the Fed will keep interest rates unchanged at its October meeting, while leaving the door open for a potential hike in December. According to the CME FedWatch Tool, there is an 89.5% probability that rates will remain steady in October, while the likelihood of a hike in December stands at approximately 82.3%.
These expectations are fueled by concerns that inflationary pressures in the U.S. have yet to fully subside. Heather Long, Chief Economist at Navy Federal Credit Union, noted that inflation remains a primary challenge for the U.S. economy and is beginning to show signs of broadening, suggesting that borrowing costs could remain elevated for a longer period.
Nevertheless, the rise in USD/CHF is being tempered by demand for the Swiss Franc as a safe-haven asset. The yield on 10-year Swiss government bonds has fallen toward 0.47%, amid growing concerns regarding fiscal conditions in Europe. Furthermore, minutes from the Swiss National Bank (SNB) meeting indicate that inflationary pressure in Switzerland is driven largely by rising oil prices and a weaker Franc.
From a technical perspective, UOB suggests that USD/CHF still has room to test the 0.8290 level, even though the market has reached overbought territory following a sharp rally. The 0.8250 level serves as the nearest support, while a sustained move above 0.8290 is considered unlikely for now. (srh)
Source: Newsmaker.id