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USD/CHF falls toward 0.9400 as FOMC-inspired optimism lifts market sentiment
As momentum has turned in favor of a risk-on profile, it is anticipated that USD/CHF will decrease to roughly 0.9400. The US dollar and rates have dropped as a result of the FOMC minutes' less aggressive tone. Strong consumer demand and low real income could lead households to increase their reliance on debt.
After two extremely negative sessions in a row, the USD/CHF pair is languishing around 0.9423 in the early Asian session. Bears have halted their six-day rally in the last two trading sessions due to investors' rising risk appetite. The dollar depreciated in response to Federal Open Market Committee (FOMC) minutes that contained less hawkish signals.
As optimistic market attitude persists, it is anticipated that the major currency will continue to decline and may approach the level of round-number support at 0.94. The FOMC minutes imply that the era of larger rate hike announcements is over and that a decrease in the rate hike pace is required to observe central banks' attempts to achieve price stability.
The US Dollar Index has declined due to Federal Reserve (Fed) policymakers' less hawkish comments on interest rate guidance (DXY). The US Dollar is currently trading near 106.10 and is predicted to challenge the low of the previous week, 105.34. As the possibility of a fifth consecutive rate hike of 75 basis points (bps) by the Fed fades, the gains earned by US Treasury bonds are losing their luster. Yields on long-term US Treasury securities have fallen below 3.80%. In the meantime, US markets are closed on Thursday for Thanksgiving.
In addition, positive US Durable Goods Orders were unable to sustain the US Dollar. The economy figures surpassed expectations and the previous publication by 1.0%. Strong consumer demand and low real income could drive consumers to rely on greater borrowing, which could result in higher delinquent expenses for credit providers.
On the subject of the Swiss franc, Swiss National Bank (SNB) Chairman Thomas J. Jordan clarified that monetary policy is still expansionary and that "we will likely alter monetary policy again" The Swiss central bank is authorized to maintain an inflation rate between 0 and 2 percent, and the current monetary policy is tight enough to accomplish this objective.
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