USD/CHF marches towards 0.9450 as DXY strengthens on firmer yields

• USD/CHF is set to reclaim last month’s high at 0.9460 amid firmer DXY.
• Rising energy bills are hurting the households and henceforth supporting the bets of a 50 bps rate hike.
• Fed President John Williams sees postpone of balance sheet reduction later this year.

The USD/CHF pair is inching towards the March high at 0.9460 on an adrenaline rush in the US dollar index (DXY). The firmer rebound in the DXY and eventually in the US Treasury yields came after hawkish comments from the Federal Reserve (Fed) policymakers, which has directed the asset towards the north.

Fed President and Federal Open Market Committee (FOMC) member John Williams in his interview on Bloomberg TV cited that the Fed should approach a 50 basis point (bps) interest rate hike in May. Fed’s Williams dictated that bringing down the inflation in a tight labor market environment would be challenging for the Fed. Also, he stated that a balance sheet reduction may postpone from June if the Fed announces a jumbo interest rate hike in May.

The 10-year US Treasury yields have recovered the losses of the last two trading sessions and recaptured a three-year high at 2.83% backed by a continuous increase in inflation expectations. On the macro data front, the elaboration of monthly US Retail Sales has cleared that gas bills are impacting the households and inflation is not going anywhere soon. Gas stations recorded the largest percentage increase from February, posting an 8.9% increase while the E-Commerce posted a decline of 6.4% and auto dealers’ sales drop 1.9% amid supply chain disruptions.

Further guidance on the asset will be provided by the Swiss docket, which will report the yearly Real Retail Sales later this month. Earlier, the 12-month Swiss Real Retail Sales were recorded at 12.8%.