USD/CHF clings to 0.9100 as Fed’s Chair Powell hit the spotlight

• USD/CHF seesaws around the 0.9100-0.9130 range as Fed’s Powell speaks.
• The USD/CHF is finding strong support at 0.9100, as the pair has jumped off that level three times.
• Fed’s Powell acknowledged that inflation is running well above the 2% goal.

The USD/CHF slides during the New York session, down 0.30%, trades around 0.9117 at the time of writing. On Wednesday, the Federal Reserve decided to keep interest rates at the 0-0.25% range, but most importantly, unveiled the bond taper process is a go, and it will start by the middle of November. Moreover, the monetary policy statement highlights that the Fed would be flexible with the pace of reductions in assets purchases, leaving the door open for a faster or slower QE’s reduction program.

Market reaction.

The USD/CHF pair dipped to 0.9100 but bounced off the lows, reaching up to 0.9140. However, at press time, Federal Reserve Chairman Jerome Powell is hosting his post-Fed press conference. 

Summary of some of Chairman’s Powell conference remarks.

Federal Reserve Chairman Jerome Powell said that the slowdown in job gains is concentrated in specific sectors. Furthermore, he said that the participation rate remains subdued, and employers are having difficulties hiring people. Powell added, though, that “these problems on jobs should diminish.”

Regarding inflation, he said that supply and demand imbalances contributed to higher prices and acknowledged that inflation is running well above the 2% goal. The chairman blamed bottlenecks and supply chains as the main drivers of heightened inflationary pressures.

Moreover, he added that “our [central bank] tools can’t ease supply constraints.” Powell reiterated that if the Fed sees signs that inflation is more persistent beyond the central bank level, they will adjust.

Summary of the Federal Reserve monetary policy statement

Summarizing comments of the Federal Reserve’s statement, they said that “elevated inflation is largely transitory, and supply and demand imbalances related to pandemic have contributed to sizable prices increases in some sectors.”

Moreover, they added, “[the fed] will begin taper later this month with reductions in treasuries purchases by $10 bln, MBS by $5 bln.” 
Nevertheless, the Fed left the door open for additional adjustments at the QE’s pace. They said “similar reductions in pace of purchases likely appropriate each month, but prepared to adjust if warranted.”

Concerning economic conditions, the central bank sees an improvement in economic activity while the labor market strengthens. 

Regarding COVID-19, they said, “Summer’s rise in COVID-19 cases slowed the recovery of sectors adversely affected by the pandemic.” They reiterated that the 
To finalize, they reiterated that the economy’s path would lie on the course of the COVID-19 pandemic.