USD/CHF rebound from 0.9200 amid caution in market mood, Fed Powell’s speech eyed

• USD/CHF has picked demand after a marginal correction to near 0.9200.
• The risk-on profile is easing further, weighed down by rising US Treasury yields.
• Fed Bostic sees no recession in CY2023 but has trimmed the GDP forecast dramatically to 1%.

The USD/CHF pair has sensed buying interest after dropping to near the round-level support of 0.9200 in the early Asian session. Earlier, the Swiss franc asset extended its recovery above the immediate resistance of 0.9200 despite a cheerful market mood.

S&P500 futures are displaying a subdued performance after a corrective move on Monday as equities failed to extend a rally. Stretched upside in stocks triggered long liquidation. The US Dollar Index (DXY) has refreshed its seven-month low at around 102.50 led by soaring recession fears after a meaningful contraction in economic activities and less-hawkish monetary policy projections after a sheer drop in wage inflation.

The demand for US government bonds is losing traction further as investors’ risk appetite is declining again. This has led to an increase in 10-year US Treasury yields above 3.53%.

On Tuesday, the show-stopper event will be the speech from Federal Reserve (Fed) chair Jerome Powell, which will trim ambiguity over February’s monetary policy action. Meanwhile, the commentary from Atlanta Fed bank president Raphael Bostic is full of information that will guide investors for further action.  Fed policymaker sees no recession in CY2023 but has trimmed Gross Domestic Product (GDP) forecast dramatically to 1%. He believes that interest rates will have to stay high for a long time well into 2024".

On the Swiss franc front, a decline in the Real Retail Sales (Nov) data on an annual basis is going to compel the Swiss National Bank (SNB) to keep monetary policy moderate. The economic data contracted by 1.3% while the street was expecting an expansion of 3.0%.