The USDCHF market takes a bearish turn as the US dollar shows a slow response. The USDCHF has been in a tug of war early in this Monday euro session. Despite the US dollar responding to the hawkish Fed’s bet, the Swiss market failed to meet expectations of strong first-quarter IP (Industrial Production) growth. Analysis shows that the first quarter’s IP was the weakest since the last quarter of 2021, only thriving at 3.5% compared to the 6.2% of 2021. This has caused the Swiss National Bank to be more proactive in increasing the standard rate in an attempt to stimulate the economy.
In addition, traders are also wary about the US dollar’s strength as they speculate that the Feds may be overdoing their hawkish bets. In this case, investors are likely to look for safe-haven investments, such as the Swiss franc, as a means of hedging their portfolios. The US dollar has been struggling to gain traction in the market, and the dollar index has remained around the 103.100 level. Recent concerns about the Euro-American relationship have kept the US dollar in a positive light, but a move by the Federal Reserve could have a major impact on the dollar index.
USDCHF Driven by Mixed Signals
The summit in Japan, led by US President Joe Biden, gave a clearer picture of improved ties with China. On Friday, Fed Chair Powell discussed the recent banking crisis and how it has reduced the need to raise interest rates. As a result, the USDCHF has been driven by mixed signals, and traders are on the lookout for key indicators such as May’s PMI (Purchasing Managers’ Index) and the Fed Minutes. These key indicators will provide crucial insight into the direction of the US dollar and the dollar index. Despite the current low profile of the dollar, there is still hope for a turnaround as the US economy has proven resilient in the face of crises. This, in turn, will influence the Swiss direction.
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