USD/CHF reversed course and rose near 0.9300 on risk aversion

• USD/CHF rallied on deteriorating market sentiment, spurred on by fears of bank contagion.
• Retail Sales in the United States contracted, while producer inflation eased.
• If necessary, the Swiss National Bank would act as a liquidity provider for Credit Suisse.

USD/CHF soars as sentiment is compounded by fears of the United States (US) banking crisis spreading across the globe. On Wednesday, the shares of Credit Suisse (CS) plunged 24% after an interview with one of its main shareholders, who said he will not increase his stake in banking due to regulation. At the time of writing, the USD/CHF pair is trading at 0.9287, up 1.61% or 145 points.

Swiss franc plunges on Credit Suisse fall

Market sentiment remains sour as portrayed by Wall Street, which extends its losses. The massive sale of Crédito Suisse continued in the European session, while the banks’ Credit Default Swaps (CDS) “raised to levels that indicate that Crédito Suisse is in serious financial difficulties,” according to Bloomberg. Therefore, the CBOE Volatility Index (VIX) rose and peaked at 30.81 before easing to current levels of 27.16.

Retail Sales for February stood out on the US economic agenda. The numbers were -0.4% MoM, beating estimates of a 0.3% contraction. Although the data was negative, it showed the resistance of US consumers to spend. In another tranche of data, the Department of Labor (DoL) revealed that February’s Producer Price Index (PPI), in headline and core figures, came in below estimates. This shows that the cumulative tightening of the Fed Funds Rate (FFR) is working, despite the tight labor market.

Therefore, safe-haven flows boosted the US dollar (USD), and the Dollar Index advanced 1.13% to 104.836. However, US Treasury yields have been punished by investors, with US 2-year and 10-year Treasury yields extending their losses, each down 37 basis points (bps) and 24 bps, respectively, at 3.889% and 3.453%.

Apart from this, the latest news coming across the wires said that the Swiss regulator FINMA would probably be ruling on Credit Suisse soon.

At the time of writing, the Swiss National Bank and the Swiss Financial Markets Supervisory Authority issued a statement. It reads as follows: “Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks. If necessary, the SNB will provide liquidity to Credit Suisse.”

USD/CHF Technical Levels