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USD/CHF Fluctuates Near 0.90 Prior To Swiss Retail Sales, The Fed's Preferred Inflation Indicator
The USD/CHF begins a two-day winning streak before significant Swiss and US data. In the midst of hawkish Fed wagers and US data-driven optimism, market sentiment remains unstable. Maechler of the SNB argues for higher interest rates, but Fed policymakers grabbed the show. The Swiss Retail Sales and the US Core PCE Price Index will be pivotal for intraday direction.
USD/CHF remains subdued near the weekly high, recently ranging between 0.8995 and 9000 as traders await key Swiss and US data on Friday morning. Additionally, the hawkish stance of the Swiss National Bank (SNB) and Federal Reserve (Fed) officials, as well as positive US data, may have contributed to the strength of the Swiss Franc (CHF) pair.
Even though there were no significant updates from Switzerland on Thursday, SNB Governing Board member Andrea Maechler's hawkish speech on Wednesday drives USD/CHF bulls to the weekly high. SNB's Maechler stated, "Swiss inflation is broader and more persistent than anticipated."
In contrast, Fed Chair Jerome Powell stated at the Fourth Conference on Financial Stability hosted by the Bank of Spain in Madrid, "A large majority of Fed policymakers anticipate two or more rate hikes by the end of the year." In addition, the president of the Federal Reserve Bank of Atlanta, Raphael Bostic, told reporters regarding prospective rate increases that he does not see the same sense of urgency as others, including Chairman Jerome Powell. Recently, however, the policymaker made a U-turn, stating, "I believe it's clear that inflation has significantly declined."
It should be noted that the majority of US data was positive and aided USD/CHF investors. The US Gross Domestic Product (GDP) Annualised, also known as the Real GDP, grew at a rate of 2.0% for the first quarter (Q1) of 2023, as opposed to the initial estimate of 1.3%. In addition, the US Weekly Initial Jobless Claims decreased to 239K for the week ending June 23, compared to the expected and revised figure of 265K. However, the Personal Consumption Expenditure (PCE) Price for Q1 2023 decreased to 4.1% QoQ from 4.2% expected and prior, and Pending Home Sales for May fell to -2.7% MoM from 0.2% expected and -0.4% prior (revised).
Wall Street closed with a gain, but 10-year and 2-year US Treasury bond yields also rose, and the US Dollar Index (DXY) reached a new weekly high before falling to 103.40. It should be noted that, as of press time, S&P500 Futures are showing slight gains.
Ahead of the Federal Reserve's (Fed) preferred inflation gauge, namely the US Core Personal Consumption Expenditures (PCE) Price Index for May, Swiss Real Retail Sales for May, anticipated to be -2.5% YoY compared to -3.7% previously, will provide immediate guidance. Nevertheless, the US Core PCE Price Index is likely to remain unchanged at 0.4% MoM and 4.7% YoY, which may enable the Fed to maintain its hawkish stance and propel the USD/CHF.
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