USD/CHF corrects to near 0.8950 as SNB comes into spotlight

• USD/CHF has failed in extending its recovery as the focus has shifted to SNB policy.
• A sideways auction in the USD Index is widely expected as the street is divided about the interest rate guidance from the Fed.
• The SNB is expected to hike interest rates by 25 bps to 1.75%.

The USD/CHF has shown a mild correction to near 0.8950 in the European session. The Swiss Franc asset has faced barricades around 0.8970 as investors are shifting their focus toward the interest rate decision by the Swiss National Bank (SNB), which will be announced on Thursday.

S&P500 futures have turned bearish again as investors are getting precautionary due to extend weekend in the United States. The market participants will come back on Tuesday as markets are closed on Monday on account of Juneteenth.

The USD Index (DXY) has failed to extend the recovery move made above 102.45. A sideways auction in the USD Index is widely expected as the street is divided about the interest rate guidance from the Federal Reserve (Fed). Although Fed chair Jerome Powell announced that two interest rate hikes are appropriate this year, investors are hoping a single rate hike announcement will be made as US economic prospects are losing resilience.

Meanwhile, headlines from discussions between US Secretary of State Antony Blinken and China’s President XI Jinping are not making any significant impact on the FX domain. US Blinken cited that he is concerned about Chinese businesses providing Russian military technology. US President Joe Biden has clarified that the economy doesn’t want a cold war with China.

On the Swiss franc front, investors are shifting their focus toward the interest rate decision by the Swiss National Bank (SNB). SNB Chairman Thomas J. Jordan is expected to hike interest rates by 25 basis points (bps) as he believes that a high-inflation environment will have more side effects than a low-inflation atmosphere.