USD/CHF continues to swing below 0.9000 awaiting Powell’s testimony from the Fed and SNB policy

• USD/CHF consolidates below 0.9000 as attention turns to SNB policy and Powell testimony.
• US stocks are expected to remain volatile as a continuation of the Fed’s hawkish guidance would accelerate recession fears.
• The SNB Jordan is expected to raise interest rates by 25 basis points to 1.75%.

The USD/CHF pair is constantly oscillating in a tight range below the psychological resistance of 0.9000 in the European session. The Swiss Franc is showing subdued performance as the upside appears to be limited due to the non-directional performance of the Dollar Index (DXY) and expectations of an interest rate hike by the Swiss National Bank (SNB).

S&P 500 futures have turned negative again as investors are cautious ahead of testimony from Federal Reserve (Fed) Chairman Jerome Powell. US stocks are expected to remain volatile as a continuation of the Fed’s hawkish guidance would accelerate recession fears.

The Dollar Index (DXY) moves higher around 102.60 points. ING economists believe the first week of July will be the major US data release, so Powell’s words may determine whether the DXY will end the quarter above or below 102.00.

Unlike the DXY, US Treasury yields have not lost their resilience. US 10-year Treasury yields have risen to around 3.76%.

As for the Swiss Franc, the focus will be on the SNB’s decision on interest rates. Among the G10 economies, Switzerland is the one with the lowest inflation levels, at 2.2% in May. SNB Chairman Thomas J. Jordan is expected to raise interest rates by 25 basis points (bp), to 1.75%. Reuters reported that SNB Jordan quoted that “It’s really important to bring Swiss inflation to a level of price stability,” further adding that it would not be a good idea to wait for inflation to rise and then raise interest rates: “When inflation stays below 2% for a long time, we don’t have any problems.”