USD/CHF rebounds from 0.8970 as chances for more rate hikes from Fed remain solid

• USD/CHF has rebounded to near 0.8980 despite subdued performance by the USD Index.
• S&P500 futures have generated significant losses in early Tokyo, showing a cautionary approach.
• Fed Williams believes that the 2% inflation objective will be achieved in at least two years

The USD/CHF pair has shown a recovery move from 0.8970 in the early Asian session. The Swiss Franc asset has managed to defend further downside and has rebounded despite the subdued performance of the US Dollar Index (DXY).

The USD Index is oscillating in a narrow range of 101.90-102.00 after a sheer volatility move. The USD Index went through wild moves after the release of the Federal Reserve’s (Fed) Beige Book.

Meanwhile, S&P500 futures have generated significant losses in the early Tokyo session as investors are discounting the release of quarterly results by various firms in the late New York session. Netflix missed earnings marginally despite significant additions of new subscribers but is worried about the password-sharing act.

The overall market mood is cautionary as investors are worried that tight credit conditions by United States commercial banks could impact guidance delivered by firms.

Also, Fed Beige Book reported that several districts have shown a decline in consumer and business-type advances. US banks have tightened conditions for availing credit by businesses amid a turbulent environment. Contrary to that, New York Fed President John Williams believes it is too early to assess the economic impact of tighter credit. On inflation guidance, the Fed policymaker is of the view that the 2% inflation objective will be achieved in at least two years. Also, he anticipates that inflation will fall to 3.25% in 2023.

On the Swiss Franc front, Swiss National Bank (SNB) policymaker, Andréa Maechler, said on Wednesday, “March rate hike serves to only slow inflation towards the 2% mark.” SNB policymaker further added that Swiss inflation is slowing but is still a worry and the central bank is ready to sell foreign currencies.