USD/CHF Attracts Gains on Thursday

The USD/CHF pair stages a goodish intraday recovery from the 0.9220 area on Thursday and snaps a two-day losing streak to an eight-month low touched the previous day. The intraday buying picks up pace after the Swiss National Bank (SNB) announced its policy decision and lifts spot prices to the 0.9300 mark during the early part of the European session.

The SNB, as was widely anticipated, hiked interest rates by 50 bps at the conclusion of its December policy meeting. This marks the third consecutive rate increase in as many meetings, summing up to a total of 175 bps of lift-off in 2022.

The Swiss Franc, however, weakened a bit as the central bank reiterated that it will remain active in foreign exchange markets as necessary. This, along with a modest US Dollar rebound, acts as a tailwind for the USD/CHF pair.

A hawkish assessment of the Federal Reserve’s decision on Wednesday is seen as a key factor lending some support to the greenback. It is worth mentioning that the US central bank signaled on Wednesday that it will continue to raise rates.

Moreover, policymakers see the terminal rate rising to 5.1%, an additional 75 bps increases in borrowing costs by the end of 2023. That said, depressed US Treasury bond yields might hold back the USD bulls from placing aggressive bets. Apart from this, the risk-off impulse could underpin the CHF and keep a lid on any meaningful appreciating move for the USD/CHF pair.

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