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On August 19th, Iranian Foreign Minister Araqchi stated in an interview broadcast on August 18th that the recent military conflict between Iran and the US and Israel proves that relying on external military forces and bases cannot guarantee the security of Gulf countries. Araqchi pointed out that the presence of US troops and military bases not only fails to provide security guarantees for the countries involved, but has instead become a factor undermining security; countries without US military bases are actually safer. Araqchi also stated that Iran is not seeking merely a ceasefire, but hopes for a complete end to the war and does not want to fall into a cycle of short-term ceasefires followed by renewed fighting.Russian officials said that after a drone crashed in the Ufa industrial zone, authorities are working to extinguish a small fire.On August 19th, Joey Chew, Head of Asian FX Research at HSBC, stated that with the yen gradually weakening again, the Bank of Japan (BOJ) has an opportunity to support the yen through a hawkish rate hike at its next meeting in September. The market currently expects the BOJ to raise interest rates by a cumulative 80 basis points over the next 12 months, bringing the rate to 1.8%. Meanwhile, HSBCs economic research team now predicts that the BOJ will raise rates twice more, in September and the first quarter of 2027, ultimately reaching a rate of 1.5%. HSBC previously only predicted a single rate hike by the BOJ in December. In a report, Joey Chew pointed out that the key to the yens continued recovery depends on whether real interest rates become more attractive, whether fiscal concerns ease, and whether Japanese residents shift from overseas assets to domestic assets.Russian authorities in Ufa claim that drones attacked industrial facilities.The Nikkei 225 index fell by more than 3%.

USD/CHF Consolidates in a Range of 0.9320-0.9350 on Expectations of Rate Reversion to Neutral

Drake Hampton

Apr 08, 2022 09:57

Tips

  • USD/CHF remained stuck around 0.9350 despite a big increase in US Treasury yields.

  • The DXY is aiming for 100.00 as traders increase their expectations for an aggressive rate hike.

  • Russia resigns from the United Nations Human Rights Council.

 

Since Thursday, the USD/CHF pair has been swinging within a narrow band of 0.9318-0.9348 as Federal Reserve (Fed) policymakers have begun prescribing a reversion to neutral rates from ultra-loose monetary policy postures.

 

After commenting on the amount to which the Fed will raise interest rates in future monetary policies, members of the Fed's Monetary Policy Committee (MPC) have changed their focus to calling for a return to neutral policy. The ultra-loose monetary policies and helicopter money used to boost growth following the Covid-19 outbreak have served their purpose, and it would be preferable to return to normal rates and a self-sufficient economy. Atlanta Fed President Raphael Bostic stated on Thursday that while it is quite acceptable for the Fed to move policy closer to neutral, it should go cautiously, according to Reuters.

 

On the Russia-Ukraine front, Russia is expelled from the United Nations (UN) Human Rights Council after its members voted against the Kremlin's war crimes in Bucha, Ukraine. Additionally, US lawmakers have decided to prohibit Moscow from importing oil, gas, and coal. Additionally, the former has opted to revoke its 'Most Favored Nation' trade designation, resulting in higher tariffs for Moscow.

 

Meanwhile, the US dollar index is heading towards the enchanted level of 100.00, fueled by forecasts for better US Consumer Price Index (CPI) data next week. The yield on the 10-year US Treasury note has recaptured a three-year high of 2.66 percent as rate rise worries resurface.

USD/CHF

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