USD/CHF oscillates around 0.9660 after a Fed-induced volatile session, SNB policy eyed

• USD/CHF is auctioning around 0.9660 ahead of a decisive move post-Fed policy scrutiny.
• The Fed’s roadmap for fighting inflation will impact the growth rate, job opportunities, and housing space.
• A rate hike of 75 bps will shift SNB’s interest rates into positive territory after a decade.

The USD/CHF pair is juggling around 0.9660 in the early Tokyo session as volatility oscillators are having a sigh of relief after a notably higher volatile session. The asset gyrated in an extreme range of 0.9620-0.9700 and has turned sideways as investors are busy with the task of Federal Reserve (Fed)’s monetary policy scrutiny for a decisive move ahead.

Wednesday’s monetary policy from the Fed has turned out a nightmare for the risk-sensitive assets. The roadmap put forward to combat inflation is full of barricades for growth rate, employment generation, and housing sector in the US economy.

The Fed has laid down a target for the interest rate at 4.6% and is looking to reach 4.4% by the end of 2023, much higher than the prior peak estimation of 3.8%. This builds a case for two possibilities either the inflation rate is not responding well to the current pace of hiking interest rates or the inflation chaos is extremely huge and is need to be contained sooner.

Meanwhile, the US dollar index (DXY) is set to recapture the fresh two-decade high at 111.58. The DXY will continue its dream run as the labor market is extremely tight and has been supporting the Fed in hiking the interest rates unhesitatingly.

On the Swiss franc front, investors are awaiting the release of the interest rate decision by the Swiss National Bank. SNB Chairman Thomas J. Jordan is expected to hike the interest rates by 75 basis points. A bigger rate hike is expected from the SNB as the central bank announces its monetary policy once a quarter. A rate hike of 75 bps will turn the interest rates positive at 0.5%. SNB’s interest rate will shift into a positive trajectory after a decade.