USD/CHF senses barricades around 0.9300 as less-hawkish Fed bets soar

• USD/CHF has sensed selling pressure while attempting to extend its recovery above 0.9300.
• The US Treasury yields have dropped to 3.50% as the Fed is set to slow down the extreme policy tightening pace.
• The SNB is expected to hike its interest rates by 50 bps to 1%.

The USD/CHF pair has faced hurdles in early Asia while attempting to cross the round-level resistance of 0.9300 after a rebound move from a fresh eight-month low of around 0.9231. The Swiss franc asset witnessed an intense sell-off on Tuesday after the release of a soft United States inflation report for November month.

Risk-perceived assets such as S&P500 extended their recovery dramatically as a significant decline in inflation data would trim weaker economic projections. The 500-stock basket surrendered some of its gains on settlement as investors are awaiting the interest rate decision by the Federal Reserve (Fed) for making informed decisions.

The US Dollar Index (DXY) is struggling to sustain above 104.00 as the Fed is expected to decelerate its interest rate hike pace led by a slowdown in inflation. Investors’ risk appetite has been strengthened as lower inflation has trimmed hopes of a recession in the United States economy. Meanwhile, the 10-year US Treasury yields have dropped to 3.50% as Fed chair Jerome Powell is expected to slow down the extreme policy tightening pace.

Meanwhile, Fed funds futures prices implied a better-than-even chance that the Fed will follow its expected half-point interest-rate hike this week with a smaller 25-basis-point rate hike in February, ultimately raising rates no higher than the 4.5%-4.75% range in its battle to beat inflation, as reported by Reuters.

On the Swiss franc front, Switzerland’s State Secretariat for Economic Affairs (SECO) in its latest economic forecasts said on Tuesday, the government expects the country's economic growth to slow next year but is unlikely to enter a recession. He further added that the energy situation in Europe is likely to remain tense with gas and electricity prices running high.

This week, the entire focus will remain on the monetary policy announcement by the Swiss National Bank (SNB). As per the consensus, SNB Chairman Thomas J. Jordan is expected to hike its interest rates by 50 basis points (bps) to 1%.