USD/CHF skids below 0.9900 as exhaustion escalates, Fed’s hawkish bets soar

• USD/CHF has dropped below 0.9900 amid subdued performance by the DXY.
• The risk-off tone has charged back as odds for Fed’s 75 bps rate hike have soared.
• The mega event of the US NFP will provide further direction to the FX domain.

The USD/CHF pair has slipped below the critical support of 0.9900 after sensing a loss in upside momentum. On a broader note, the asset is oscillating in a range of 0.9887-0.9913 and is expected to deliver an explosion of the same.

The asset has turned sideways, following the footprints of the US dollar index (DXY), as investors are awaiting the release of the US Nonfarm Payrolls (NFP) for making an informed auction. Meanwhile, the market sentiment has turned negative sharply as S&P500 has surrendered its entire pullback.

Meanwhile, bets for a fourth consecutive 75 basis points (bps) rate hike by the Federal Reserve (Fed) have soared dramatically. As per the CME Fedwatch tool, the odds advocating a 75 bps rate hike are 75.9%, higher than Thursday’s figure of 66%. However, the US dollar index (DXY) has failed to capitalize on the catalyst and has continued its lackluster performance.  

On the economic data front, the US NFP is expected to land at 250k, lower than the prior release of 315k. A continuation of monetary policy tightening by the Fed is resulting in a downbeat consensus. Due to higher interest rates, firms have postponed their capacity expansion plans. Also, weaker demand by households has forced producers to avoid full-capacity utilization. The whole structure is responsible for a decline in employment generation numbers.

On the Swiss franc front, investors are awaiting the release of the Swiss Unemployment Rate. The Swiss jobless rate is expected to remain steady at 2.1%.