USD/CHF Continues To Consolidate Around 0.9040 As Focus Shifts To US Inflation

In the early Tokyo session, the USD/CHF pair continues to trade lacklusterly above the critical support level of 0.9036. Investors are transferring their attention to the publication of United States Consumer Price Index (CPI) data on Wednesday, making it difficult for the Swiss Franc to find any direction.

Amid escalating tensions between China and Taiwan, S&P500 futures have trimmed some of their gains. The rising momentum of Chinese military exercise around Taiwan Island has alleviated market apprehension. In addition, US stocks are likely to experience volatility due to fears of a recession.

In an interview with CNN, Jamie Dimon, CEO of JPMorgan Chase, stated that the recent banking turmoil caused by the demise of Silicon Valley Bank (SVB) and Signature Bank has increased the risk of recession in the United States.  While the banking system is robust and secure, the recent turmoil in the financial system is "another weight on the scale" toward recession, he added.

In advance of US Consumer Price Index (CPI) data, the US Dollar Index (DXY) is defending the 102.00 support. According to the consensus, headline inflation will decline to 5.2% from 6.0% previously. In addition, the monthly headline CPI would decelerate to 0.3% from the previously reported 0.4%. Inflationary pressures are anticipated to become evident as a result of oil prices remaining low in March.

On the other hand, core CPI that excludes oil and food prices is expected to increase to 5.6% from the former release of 5.5%. Resilience in demand for core products due to a higher labor cost index is keeping inflationary pressures persistent. An occurrence of the same might force the Federal Reserve (Fed) to raise rates one more time in its May monetary policy meeting.

On the Swiss Franc front, Swiss markets are closed on account of Easter Monday. The Swiss Franc will be influenced this week by the Producer Price Index (PPI) data.