USD/CHF subdued in 0.9250 area as traders await key US inflation figures later this week

• USD/CHF is consolidating near 0.9250 amid a quiet start to a week that sees the release of US CPI data.
• An upside surprise could further build the case for aggressive Fed tightening and build on last Friday’s post-jobs data rally.
• Bulls may target a return to/test of last week’s highs in the mid-0.9300s.

It’s been a subdued session thus far for USD/CHF, with the pair easing back from Asia Pacific session highs in the 0.9260 area to dip as low as the 0.9220s, before returning back close to the 0.9250 mark. The tone in FX markets on Monday has, for the most part, been a subdued one, with USD/CHF confirming to the lack of volatility seen across most other major G10 currencies on the session. A slight WoW rise in Swiss Sight Deposits last week, implying further SNB forex market interventions, has not impacted sentiment at all, with focus very much on incoming risk events.

Fed policymakers Michelle Bowman and Loretta Mester will be speaking on Wednesday ahead of the release of the January Consumer Price Inflation report on Thursday. Traders will be interested as to whether Bowman or Mester push back against the recent shift in market pricing to imply a roughly one in three chance of a 50bps rate hike in March after last Friday’s strong jobs report. However, more interestingly will be whether US inflation surprises to the upside once more.

If this was to be the case, the USD/CHF’s Friday rebound from under 0.9200 to the mid-0.9200s might extend towards last week’s highs in the 0.9340 area. Recall that dollar weakness in the first part of last week saw the pair pull back to as low as 0.9180. Traders at the time said the move was “positioning-related”. If that is the case, there might even be the case for a move back towards H2 2021 highs in the 0.9360s on strong data.