USD/CHF swings either side of 0.9200 level, sticks between major DMAs as traders eye geopolitics
- USD/CHF has traded in indecisive fashion on Thursday, largely sticking within major moving averages and sticking near 0.9200.
- As focus remains on geopolitics, helping safe-haven USD and CHF, Fed Powell’s testimony and ISM data went under the radar.
Thursday has been another indecisive trading day for USD/CHF, with the pair for the most part swinging between major moving averages (21, 50 and 200 day) in a 0.9180-0.9215ish range. At current levels just under the 0.9200 mark, the pair trades about 0.1% lower on the day, with the safe-haven US dollar and Swiss Franc both making strides against their European G10 peers. After large swings in bond and equity markets in recent days, things are calmer on Thursday with US stocks having recovered early session losses as traders continue to watch developments in Ukraine.
The second round of talks there between the Russian and Ukrainian delegations appears to have made some ground towards agreeing on the creation of a safe corridor for civilians to escape out of various cities. But rhetoric from the Russian President Vladimir Putin on Thursday and reports regarding his tone on a phone call with French President Emmanuel Macron earlier in the day suggests he is as intent as ever on continuing military action against Ukraine.
While geopolitics continues to command the greatest degree of attention, USD/CHF traders were also monitoring remarks from Fed policymakers and further US data on Thursday. Fed Chair Jerome Powell appeared in the second day of his semi-annual testimony before Congress and stuck to the same script he laid out on Wednesday, not providing FX markets with any intra-day impetus. His pledge this week, which has been backed up in the rhetoric from other Fed policymakers, to press cautiously ahead with monetary tightening this year despite Ukraine risks, starting with a 25bps hike this month, seems to be supporting USD.
At the very least, the fact that the US dollar can count on continued haven demand as the Russian economy craters and the geopolitical situation remains tense, helped shield the buck from any potential post-weak ISM Services PMI survey data losses. That suggests that, regardless of the overarching risk tone, USD/CHF might be able to make some gradual headway back towards recent highs in the 0.9300 area, so long as Fed hawkishness remains in the driving seat.