The USD/CHF currency pair is rising during Tuesday morning trading in Europe, extending its gains from the previous day. This is the first time the pair has risen in three days, and it is currently trading at around 0.9300.
The recent rebound in the value of the Swiss Franc may be due to the US Dollar’s corrective bounce off its five-month low. This rebound is likely due to hawkish bets on the Federal Reserve. However, there is also cautious optimism surrounding updates in the banking industry, following a debacle in the US and Europe.
The US Dollar Index (DXY) rebounded from its lowest level in early February, snapping a three-day downtrend. The greenback was bolstered by higher US Treasury bond yields and hawkish bets on the Federal Reserve’s upcoming monetary policy meeting.
Although Treasury bond yields have remained relatively unchanged, they have recovered from multi-day lows set earlier in the week. According to CME’s FedWatch tool, the probability of a 0.25% Fed rate hike on Wednesday has increased to 75%, up from 65% last week.
According to Bloomberg, US officials are considering increasing the amount of money that is insured by the Federal Deposit Insurance Corporation (FDIC) in order to avert a potential financial crisis. This would provide relief for traders and challenge the US Dollar’s haven demand.
It is worth noting that fears about the FDIC’s inability to cover US bank deposits, due to limited funds in the reserve, are joining doubts about the UBS-Credit Suisse deal to test risk sentiment during a sluggish Asian trading session.
The S&P 500 Futures are up slightly, showing cautious optimism among investors.
February trade numbers from Switzerland are expected to come out before second-tier housing data from the US, which could provide some intraday trading opportunities for USD/CHF. However, the main focus will be on the ongoing rivalry between the Federal Reserve and the Swiss National Bank (SNB), as the latter has recently advocated for a change in policy.