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The USD/CHF remains under selling pressure above the 0.9000 level in early Asian trading on Monday. USD/CHF losses have been supported by dollar weakness and falling US Treasury yields amid rising geopolitical tensions in the Middle East. The USD/CHF is currently trading around the 0.9018 level, unchanged throughout the day.
On Friday, the University of Michigan’s (UoM) one-year inflation forecast rose to 3.8% from 3.2%, and the five-year inflation forecast jumped to 3% from 2.8%. In addition, Friday’s preliminary reading of the Michigan Consumer Confidence Index fell to 63.0 from 68.1, which was lower than the expected reading of 67.4.
With measures of inflation expectations rising and inflation data coming in stronger than expected, investors are expecting the Federal Reserve to raise interest rates before the end of the year. The U.S. Consumer Price Index (CPI) for September was 3.7% on an annual basis and 0.4% on a monthly basis. However, dovish comments from Fed officials may give bullish traders a reason to go long on the USD/CHF.
Economic data released by the Swiss Federal Statistical Office on Friday showed that Swiss producer and import prices posted an annualized rate of -1.0% in September, compared to -0.8% in the previous month. Swiss producer and import prices fell to -0.1% in September from -0.8% in the previous month.
Prime Minister Benjamin Netanyahu vowed on Sunday to “destroy Hamas” as Israeli forces prepared for a ground operation in Gaza to root out the militant group. Despite the escalating humanitarian crisis in the Palestinian coastal enclave, Israel has signaled that it is preparing for a ground operation in Gaza. Biden has called for the protection of civilians as the United States has struggled to alleviate food, water and oil shortages. Still, rising geopolitical tensions between Israel and Palestine could boost the traditional safe haven.
