USD/CHF reclaims 0.9400 as US consumer spending recovery affirms more rates from Fed

• USD/CHF has recaptured the 0.9400 resistance after a marginal corrective move.
• The Swiss franc asset was heavily bided after a higher-than-projected jump in US consumer spending.
• Fed Mester has favored for rates above 5% and their sustainability for a longer period.

The USD/CHF pair has reclaimed the round-level resistance of 0.9400 after a mild correction in the early Asian session. The Swiss franc asset was heavily bided on Friday after a higher-than-projected jump in United States consumer spending. The monthly US Personal Consumption Expenditure (PCE) jumped by 0.6% in January led by the advancing wage index, which has delighted households to carry more funds for disposal.

A recovery in consumer spending has refreshed fears of a recession in the United States as the Federal Reserve (Fed) is highly likely to consider more rates ahead. Cleveland Federal Reserve (Fed) Bank President Loretta Mester cited “Will need to go above 5% funds rate, stay there for a while.” He further added, “Data shows inflation not yet on trend to get back sustainably to 2% target.”

Rising fears of the US recession forced the market participants to dump S&P500 on Friday. The US equities were heavily sold on fears that more rates by the Fed will result in lower operating margins for firms due to rising interest obligations.

The US Dollar Index (DXY) is demonstrating a volatility contraction minutely below 105.00, however, the upside looks favored amid the risk-aversion theme. The expectations of further policy restrictions by the Fed resulted in a recovery in the US Treasury yields. The alpha provided on 10-year US government bonds scaled to near 3.95%.

Meanwhile, rising inflation in the Swiss area is accelerating fears for the Swiss National Bank (SNB).  The inflation is getting beyond the handling capacity of SNB Chairman Thomas J. Jordan, which will result in more rate announcements ahead.