USD/CHF stays pressured around 0.9950 post-Fed as SNB Interest Rate Decision looms

• USD/CHF holds lower grounds after witnessing the Fed-inspired heavy daily losses.
• Fed’s 0.75% rate hike couldn’t impress USD bulls as Chairman Powell sounds normal.
• SNB is less likely to alter current interest rates but hints for September rate hike will be crucial to watch.
• SNB Monetary Policy Statement, Governor Macklem’s press conference will be eyed too.

USD/CHF remains depressed around mid-0.9900s, after posting the biggest daily loss in three weeks, as traders await the Swiss National Bank’s (SNB) monetary policy decision. The Swiss currency’s (CHF) inaction during Thursday’s Asian session could also be linked to a light calendar and fewer catalysts amid the post-Fed relaxation.

That said, the US Federal Reserve (Fed) announced the biggest interest rate hike since 1994 to battle inflation fears. The US central bank also revised up inflation forecasts for this year and the next while cutting down the inflation expectations. Further, the policymakers also signaled either a 50 bp or 75 bp rate hike in the next meeting. However, the Fed’s rejection of the odds of a 100 bp rate increase and Chairman Jerome Powell’s measured comments seem to have drowned the Treasury yields and the US dollar afterward.

It’s worth noting that the quarterly report of the Swiss State Secretariat for Economic Affairs (SECO) revised GDP forecasts to 2.6% versus 2.8% previous expectations for 2022 while also cutting down the 2023 GDP predictions to 1.9% from 2.0%. The SECO report also quoted government warning risks stemming from the war in Ukraine and food and energy inflation has increased.

On the other hand, US Retail Sales marked a contraction of 0.3% MoM versus an anticipated growth of 0.2% and downwardly revised 0.7% previous readings. Also, the NY Empire State Manufacturing Index dropped to -1.2 compared to 3.0 market consensus and -11.6 prior.

Looking forward, USD/CHF moves are likely to depend upon the SNB’s reaction to the latest inflation fears. The Swiss central bank isn’t expected to alter the benchmark rate, currently at -0.75%. However, signals for a September rate hike will be a welcome sign for the USD/CHF bears. “Twenty-four of 26 economists expect the SNB to keep its policy rate steady at minus 0.75%, the lowest in the world and the rate it has maintained since 2015,” said the latest Reuters poll on SNB.

Technical analysis

USD/CHF pulls back from the 1.0050 hurdle amid nearly overbought RSI conditions, suggesting further declines. However, a two-week-old support line, near 0.9930 by the press time, restricts the pair’s immediate downside.