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On March 2nd, Bank of Japan Deputy Governor Ryozo Himino gave no clear indication of a near-term interest rate hike, reinforcing financial markets expectations that the central bank will remain on hold in March. Following the outbreak of conflict in the Middle East last weekend, the market widely believed the Bank of Japan would maintain a wait-and-see approach. Himino stated, "I want to closely monitor the situation in the Middle East," a stark contrast to his comments in January, when he indicated the committee would discuss interest rate hikes at its upcoming meeting. Himino, who will hold a press conference this afternoon, said his prepared remarks were made before the weekend and therefore did not include his views on the Middle East situation. Himino stated that recent data "means the impact of a near-term rate hike remains limited, and financial conditions remain loose," suggesting there is still room for borrowing costs to rise. He also stated that underlying inflation is steadily rising and cited the Bank of Japans long-standing stance that it will continue to raise interest rates if its economic outlook is realized.The China Earthquake Networks Center officially reported that a 5.9-magnitude earthquake occurred at 11:55 a.m. on March 2 in the volcanic archipelago of Japan (23.10 degrees north latitude, 144.15 degrees east longitude), with a focal depth of 10 kilometers.According to ABC News, the U.S. House of Representatives is expected to vote on a war powers resolution on Thursday that would require the president to obtain congressional approval before taking any further military action.According to Iranian media reports on the 2nd, the Iranian Islamic Revolutionary Guard Corps said that a US MQ-9 Reaper drone was intercepted and shot down by a defense system in Isfahan, Iran.Daiwa: Lowered its target price for Xiaomi Group (01810.HK) from HK$55 to HK$45.

USD/CHF Steady at 1.0020 as DXY Pauses, Powell and US Retail Sales Take Center Stage

Daniel Rogers

May 16, 2022 10:46

The USD/CHF pair is bouncing within a small range between 1.0020 and 1.0030 in early Tokyo, as the US dollar index (DXY) is not gaining much traction due to Monday's light economic calendar. Although broad-based fundamentals continue to favor the dollar bulls, the Federal Reserve (Fed) is projected to raise interest rates by another significant number in June in an effort to limit the inflation issue.

 

Last week, Fed's Powell's interview with the national radio show Marketplace revealed the ongoing conversations among Fed policymakers regarding anticipated rate hikes in monetary policies. Fed Powell indicated that the Fed could declare two additional rate hikes in the next two consecutive monetary policy sessions in order to tame the soaring inflation.

 

In the meantime, the US dollar index (DXY) is poised between 104.46 and 104.60 after reaching a new 19-year high of 105.00 on Friday. The DXY appreciates the broader gains but requires further triggers to maintain strong. In the future, two significant events on Tuesday will keep investors occupied. First will be Fed Chairman Powell's speech, which will likely influence monetary policy action in June. The second significant event is the monthly US Retail Sales report, which is anticipated to increase by 0.7% from the previous reading of 0.5%.

 

In terms of the Swiss franc, Friday's Industrial Production data will be the focal point. The catalyst reached 7.3% the previous time. A greater-than-anticipated number will strengthen the Swiss franc against the U.S. dollar. 

USD/CHF

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