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On September 18th, arguably the biggest surprise in the Federal Reserves latest interest rate decision was the single dissenting vote. Despite unfavorable circumstances, Fed Chairman Powell managed to achieve a near-unanimous consensus at this weeks monetary policy meeting. Newly appointed Governor Milan was the only vote against the 25 basis point rate cut. Milan, a close ally of Trump, was sworn in as an interim Fed governor on Tuesday. His objection was based on support for a larger rate cut—something Trump has been demanding for months. However, Governors Waller and Bowman, who had voiced dovish dissent in July, did not do so again this time. KPMG Chief Economist Diane Swonk said, "Its clear that Powell has successfully herded the cats together."Meghan Robson, head of U.S. credit strategy at BNP Paribas: "Todays Fed decision suggests the Fed will prioritize growth over inflation and may allow the economy to "overheat" until the inflation path becomes clearer. We believe this policy approach should currently support credit spreads."Syrian President: Security agreement with Israel is a "necessary move" and Syrias airspace and territorial integrity should be respected.Syrian president: Security talks with Israel may produce results in the "coming days."Scott Kimball, chief investment officer of the fixed income team at Loop Asset Management: "The Feds 12-month inflation forecast is 2.6%, which shows that it is more tolerant of inflation and may no longer be its primary focus. Implementing a looser policy on the basis of fiscal stimulus should support lower-quality corporate credit spreads."

USD/CHF Jumps on a Weak Open Near 0.9310, Tracing the DXY's Recovery

Drake Hampton

Apr 11, 2022 10:46

  • USD/CHF has shrugged off the bearish opening and is aiming for last week's high of 0.9370.

  • The Fed's big interest rate hike is premised on a forecast of a higher US CPI print of 8.3 percent.

  • Mester of the Federal Reserve anticipates that inflation will remain elevated even next year.

 

The USD/CHF pair is surging higher on Monday following a slightly negative starting gap at approximately 0.9310. Typically, a stronger positive response by market players following a gap-down opening signal a bargain purchase for investors.

 

The pair is extending last week's optimism, as the Swiss unemployment rate remained constant at 2.2 percent, supporting the strong greenback against the Swiss franc.

 

The asset is tracking the US dollar index (DXY), which is predicted to continue printing huge swings as investors await Tuesday's release of the US Consumer Price Index (CPI). This will have a substantial impact on the Federal Reserve's (Fed) probable monetary policy move in May.

 

The market consensus estimates annual US inflation at 8.3 percent, far higher than the prior number of 7.9. On the inflation front in the United States, Cleveland Federal Reserve (Fed) president Loretta Mester indicated on Sunday that inflation will continue high this year and next despite the Fed's gradual slowing of price hikes, according to Reuters. To keep inflation below the target of 2%, a reasonable healthy time is required, and the Fed is expected to maintain a robust hawkish position until then.

USD/CHF

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