USD/CHF retreats from 0.9330 as investors shrug off US inflation worries, US Treasury yields plunge

  • USD/CHF has sensed a minor sell-off at around 0.9330 as fears of US CPI wobble.
  • US Treasury yields tumbled from 2.83% as investors have already discounted the higher US inflation print.
  • This week, US Retail Sales will be a major trigger for further guidance.

The USD/CHF pair has attracted some offers at around 0.9328 in early Tokyo after the market participants shrug off the fears of higher US inflation. Considering Russia’s invasion of Ukraine and helicopter money infused by the Federal Reserve (Fed) since the pandemic of Covid-19 to spur the aggregate demand, a US inflation print at a multi-decade high was highly expected.

The US Consumer Price Index (CPI) has landed at 8.5%, higher than the estimates of 8.4%. This has triggered the need for a reign in on inflation by spurring the interest rates and balance sheet reduction. The announcement of the US CPI has brought a sell-off in the US Treasury yields. The 10-year US Treasury yields eased sharply after hitting a fresh-three-year high at 2.83%. It seems that investors have already priced in the higher print of US inflation.

Meanwhile, Fed Vice Chair Lael Brainard in her speech on Tuesday has emphasized more on moderation of inflation in the core goods segment. She also added that it is encouraging to see a fall in the unemployment rate in the last few months of labor market reports and that the improvement in the participation rate has more way to go.

Going forward, investors will focus on US monthly Retail Sales, which will be released by the US Census Bureau on Thursday. A preliminary estimate of the US Retail Sales claims a higher print at 0.6% against the prior figure of 0.3%.

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