USD/CHF consolidates as traders await US inflation readings to confirm Fed hawkish bias
- USD/CHF is steady in low volatility ahead of US inflation data.
- Federal Reserve sentiment could well enter an otherwise risk-friendly environment.
At 0.9242, USD/CHF is flat on the day as traders brace for the US Consumer Price Index to be released in the morning in the US, which should seal the deal for the March takeoff at the Federal Reserve. USD/CHF has so far traded in a tight consolidation range between 0.9240 and 0.9247 in Asia.
Improved risk sentiment helped global equities firm on Wednesday. The Dow Jones Industrial Average (DJI) gained 0.86% to end at 35,768.06 points, while the S&P 500 rebounded 1.45% to 4,587.18. The Nasdaq Composite (IXIC) climbed 2.08% to 14,490.37. MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 1.8% and hit a more than two-week high. Additionally, positive headlines in recent days suggesting tensions between the West and Russia over Ukraine have eased have dampened flows into safe-haven assets, such as the Swiss Franc.
Focus on US CPI data
At this point, markets will be eyeing the US inflation numbers, expecting a strong figure that should revive sentiment regarding the Federal Reserve’s policy tightening. Markets are pricing in more than a 70% chance of a 25bp hike and nearly a 30% chance of a 50bp hike when U.S. policymakers meet in March, according to CME’s FedWatch tool . it comes as markets expect the US consumer price index to have risen more than 7% year-over-year in January.