USD/CHF approaches 0.9000 as US debt-ceiling issues provoke negative sentiment
- USD/CHF is approaching the psychological resistance of 0.9000 amid deepening concerns over US debt-ceiling issues.
- If situation of default in obligated payments by the US Treasury comes across, its long-term credibility will get impacted dramatically.
- The restrictive monetary policy approach by the SNB is weighing effectively on inflationary pressures.
The USD/CHF pair is marching towards the psychological resistance of 0.9000 in the Asian session. The Swiss franc asset is looking to continue its two-day winning streak if it manages to overstep Friday’s high at 0.8988. The major is eyeing more gains as United States debt-ceiling issues have underpinned the risk-aversion theme.
S&P500 futures have added some losses in the Asian session after a mild bearish Friday, indicating caution among investors ahead of negotiations over US debt-ceiling issues. Investors are worried that if the situation of default in obligated payments by the US Treasury comes across, the long-term credibility of the US economy will get impacted dramatically. Also, the risks of recession will get fueled heavily.
The US Dollar Index (DXY) is showing a sideways performance around 102.70, however, the upside seems favored amid improvement as a safe-haven appeal despite chances of no further rate hikes by the Federal Reserve (Fed
Major US economic indicators are appealing to a pause in the rate-hiking spell by the Federal Reserve. US inflation and prices offered by producers for goods and services at factory gates have slowed down, and labor market conditions are softening due to tight credit conditions and a bleak economic outlook, which indicates that the Fed will halt its aggressive policy-tightening spree to shield the economy from severe damage.
On the Swiss franc front, investors are awaiting the release of the Producer and Import Prices data (April). Monthly economic data is seen contracting by 0.1% vs. expansion of 0.2%. Also, the annual data will soften to 1.1% from the former release of 2.1%. This indicates that the restrictive monetary policy approach by the Swiss National Bank (SNB) is weighing effectively on inflationary pressures.