USD/CHF sees downside below 0.9820 as DXY turns subdued ahead of US Retail Sales
- USD/CHF is expected to display more downside after violating 0.9820 amid a correction in DXY.
- The DXY has renewed its 19-year high at 109.20 on soaring hawkish Fed bets.
- A 1% rate hike by the Fed may put an extreme burden on the growth prospects of the US economy.
The USD/CHF pair is declining gradually after failing to kiss the crucial resistance of 0.9900 on Thursday. The asset has displayed a squeeze in volatility and is likely to display an expansion in the same after surrendering the cushion of 0.9820
The US dollar index (DXY) has entered into a correction phase after failing to sustain above the dynamic hurdle of 109.00. The asset is refreshing its 19-year high in each trading session, which is sufficient to claim that the bulls' party is not over and the correction would turn into a bullish impulsive wave sooner.
The odds of a 100 basis points (bps) rate hike by the Federal Reserve (Fed) are advancing firmly and eventually are haunting the market participants as it is not necessary that the economy may handle the unusual burden. Fed policymakers are empowered by solid growth prospects and employment generation to sound hawkish in their interviews. The rate hike by 1% could test the strength of the economy and there is no surety that it may handle the burden more comfortably this time. Failing to do the same may drive the economy towards recession.
In today’s session, the release of the US Retail Sales will remain in focus. A preliminary estimate for the economic data is 0.8%, and outperformance is expected in comparison to the prior release of -0.3%.
On the Swiss franc front, the less dependency of the Swiss economy on oil imports from Russia is making it a lucrative bet as the economy won’t face the energy issues despite being in Europe. The focus will remain on commentary over interest rates by the Swiss National Bank (SNB), which will guide the market participants.