The USD/CHF Currency Pair Advances Towards 0.9450 As the DXY Strengthens Due to Firmer Yields

The USD/CHF pair is edging closer to its March high of 0.9460, aided by a surge in the US dollar index (DXY). The stronger comeback in the DXY and, ultimately, in US Treasury yields occurred in response to hawkish statements from Federal Reserve (Fed) policymakers, which pushed the asset to the north.

In an interview with Bloomberg TV, Fed President and Federal Open Market Committee (FOMC) member John Williams stated that the Fed should consider a 50 basis point (bps) interest rate hike in May. According to Williams, pushing inflation down in a tight labor market context would be difficult for the Fed. Additionally, he indicated that if the Fed announces a big interest rate hike in May, a balance sheet decrease may be delayed until June.

The 10-year US Treasury yields have recouped their losses from the previous two trading days and reclaimed a three-year high of 2.83 percent, bolstered by a sustained increase in inflation forecasts. On the macroeconomic data front, the elaboration of monthly US Retail Sales has demonstrated that rising gas prices are having an effect on households and that inflation will not abate anytime soon. Gas stations saw the biggest percentage rise from February, up 8.9 percent, while E-Commerce saw a 6.4 percent decline and auto dealers saw a 1.9 percent decline in sales due to supply chain delays.

Additional guidance on the asset will come from the Swiss docket, which will release its annual Real Retail Sales report later this month. Previously, Swiss Real Retail Sales were registered at 12.8 percent during a 12-month period.

USD/CHF