USD/CHF cracks to near 0.8950, follows footprints of falling USD Index, US Employment in focus

• USD/CHF has slipped strongly as investors have shrugged-off uncertainty associated with the Fed interest rate outlook.
• Investors have shrugged-off uncertainty associated with the hawkish interest rate outlook from Fed policymakers.
• SNB Maechler commented that further hikes in interest rates cannot be ruled out.

The USD/CHF pair has witnessed an intense sell-off, following the footprints of the declining US Dollar Index (DXY) in the European session. The Swiss Franc asset has slipped sharply to near 0.8950 as investors have shrugged-off uncertainty associated with the hawkish interest rate outlook from Federal Reserve (Fed) policymakers and upcoming Employment data.

S&P500 futures have recovered nominal losses posted in London, however, the overall market sentiment is bearish. The US Dollar Index (DXY) has slipped vertically to near 103.00 despite more interest rate hikes from the Fed being highly likely.

Federal Open Market Committee (FOMC) minutes showed that all policymakers have favored more interest rate hikes as inflation is extremely stubborn. Fed policymakers decided to skip policy-tightening in June as the central bank would get sufficient time to assess monetary policy conditions and the impact of interest rate hikes yet made.

Meanwhile, New York Fed Bank President John Williams crossed showed support for slowing down on the rate hike trajectory. Fed policymaker also showed his data dependency for future central bank decisions.

Apart from that, the United States Automatic Data Processing (ADP) Employment report will be keenly watched. As per the estimates, the US ADP report will show fresh additions of 228K in June vs. the former addition of 278K.

On the Swiss Franc front, Swiss National Bank (SNB) governing board member, Andrea Maechler, commented “It cannot be ruled out that we will need to further hike interest rates.” Investors should note that the Swiss Consumer Price Index (CPI) slipped below 2% in May.