USD/CHF oscillates around 0.9400 ahead of US five-year inflation expectations

• USD/CHF is hovering around 0.9400 as investors await fresh impetus for further guidance.
• The risk-on impulse is expected to restrict the US Dollar from gaining strength.
• The US economy may show a mild contraction in the first half of CY2023.

The USD/CHF pair is displaying back-and-forth moves near the round-level hurdle of 0.9400 in the Tokyo session as investors are awaiting the release of the five-year consumer inflation expectations in the United States for further guidance. The Swiss franc asset is attempting to cross the immediate hurdle of 0.9410, however, the risk-on impulse is restricting the US Dollar from gaining strength.

The US Dollar Index (DXY) is facing barricades around the critical resistance of 105.20 amid the risk appetite theme. Meanwhile, the 10-year US Treasury yields have attempted a rebound after dropping to near 3.40% on Wednesday. The return on long-term US Treasury bonds has resurfaced to near 3.45%.

Escalating uncertainty over Federal Reserve (Fed)’s policy outlook has triggered anxiety among market participants. With upbeat United States economic data, investors are anticipating more interest rate hikes by the Fed to offset fresh inflation triggers. Also, it will force a recession as firms will trim or tick to the current extent of economic activities due to higher interest obligations.

Bank of America (BoA) CEO Brian Moynihan told investors at a Goldman Sachs financial conference that the United States economy will show "negative growth" in the first part of 2023, but the contraction will be "mild."

Going forward, investors will keep an eye on US five-year Consumer Inflation Expectations, which will release on Friday.

On the Swiss franc front, investors are shifting their focus toward the interest rate decision by the Swiss National Bank (SNB), which is scheduled for next week. SNB Chairman Thomas J. Jordan is expected to continue with policy easing as the inflationary pressures are marginally above the desired rate. This week, the Swiss Unemployment Rate dropped to 2.1% lower than expectations and the prior release of 2.0%.