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USD/CHF surges to fresh weekly top as Credit Suisse rattles markets and boosts USD

  • USD/CHF gains strong positive traction on Wednesday amid a blowout intraday USD rally.
  • Negative news surrounding Credit Suisse boosts the USD’s global reserve currency status.
  • Bets for at least a 25 bps Fed rate hike in March support prospect for a further upside.

The USD/CHF pair catches aggressive bids during the mid-European session and rallies to a fresh weekly top, above mid-0.9200s in the last hour.

The latest leg of a sudden spike is led by negative news surrounding the Swiss lender Credit Suisse, In fact, the top shareholder of the Swiss bank ruled out investing any more in the troubled Swiss bank as a bigger holding would bring additional regulatory hurdles. Moreover, the Swiss National Bank (SNB) offers no comment on the Credit Suisse situation and fuels speculations that the bank will indeed default. This triggers a massive sell-off across the global equity markets, which boosts the US Dollar's status as the global reverse currency and turns out to be a key factor behind the USD/CHF pair's steep intraday rise.

The Greenback is drawing additional support from reviving bets for at least a 25 bps rate hike by the Federal Reserve at its next policy meeting on March 21-22. The market expectations were reaffirmed by the latest US CPI report released on Tuesday, which indicated that inflation isn't coming down quite as fast as hoped. This, in turn, favours the USD bulls and supports prospects for a further near-term appreciating move for the USD/CHF pair, which has now recovered nearly 200 pips from its lowest level since early February, around the 0.9070 region touched on Monday.

Market participants now look to the US economic docket - featuring the release of the Producer Price Index (PPI), monthly Retail Sales figures and the Empire State Manufacturing Index. The data might influence the USD price dynamics and provide a fresh impetus to the USD/CHF pair. The focus, however, will remain on the looming banking crisis, which should continue to infuse volatility in the financial markets and allow traders to grab short-term opportunities.

Technical levels to watch

 

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