USD/CHF flatlines in 0.9300 area, bulls eye test of H2 2021 highs around 0.9370 on Fed speak/US data packed week

• USD/CHF is trading flat just above 0.9300 after ignoring Fed’s Daly and SNB’s Jordan ahead of more Fed speak.
• Fed speak, alongside US data, will be a key theme for USD/CHF this week.
• Bulls are eyeing a test of H2 2021 highs in the 0.9370 area.

USD/CHF flatlined on Monday, as the safe-haven Swiss franc and US dollar both underperformer their other more risk-sensitive G10 peers amid a broad pick up in the market’s appetite for risk. The pair did manage to squeeze out a fresh 10-week high in the 0.9340s but has since ebbed back to trading flat on the day just above the 0.9300 level, with the December high in the 0.9290s offering decent support. The pair was unreactive to the latest weekly domestic Swiss sight deposits which showed a sharp rise (indicative of an uptick in SNB intervention) or remarks from SNB Chairman Thomas Jordan. Jordan did not say anything new or interesting on central bank policy, though did praise recent moves by the Fed to signal upcoming rate hikes.

Meanwhile, the latest remarks from San Francisco Fed President Mary Daly were also broadly ignored by FX markets. Daly threw her support behind the removal of extraordinary monetary stimulus this year. Reading between the lines, she also hinted that she could be open to five 25bps hikes, as she said that ending the year with rates at 1.25% would still mean providing support to the economy. FX markets don’t have much time to dwell of Daly’s latest remarks, with remarks from Fed policymakers Ester George (at 1740GMT) and Raphael Bostic (at 1830GMT) coming up shortly ahead of a smattering of other Fed speakers throughout the week.

Fed speak will of course be one of the key FX market drivers this week after last week’s hawkish Fed policy announcement sent the US dollar surging across the board. Also feeding into the Fed tightening theme will be a barrage of US data, most important of which will be Friday’s January labour market report. Particular focus will be on indicators of wage inflation and labour market tightness, with the headline NFP number expected to be weak (Omicron deterring workers from finding jobs). If this week’s Fed speak and US data does further pump Fed tightening bets, that could be enough to send USD/CHF to test H2 2021’s double top around 0.9370.