USD/CHF looks to reclaim 0.9300 despite upbeat Swiss Unemployment data

• USD/CHF has surged higher despite an improvement in the Swiss Unemployment Rate.
• A slim risk appetite of investors has favored the greenback against the Swiss franc.
• An aggressive interest rate hike in March’s US monetary policy action is gaining more traction.

The USD/CHF pair is rallying higher despite an improvement in the monthly Unemployment Rate by the Swiss State Secretariat for Economic Affairs (SECO) on Monday. The Swiss monthly Unemployment Rate landed at 2.2% lower than the market consensus and prior print of 2.3%. The Swiss franc failed to capitalize on the improved monthly Swiss unemployment rate against the greenback.

It is worth noting that USD/CHF has been scaling higher in March as the market participants have preferred the greenback against the Swiss franc in the ongoing geopolitical tensions.  The escalation in the Russia-Ukraine war has spooked the market and a slim risk appetite of investors has pushed them to shift their funds into safe-haven assets.

Meanwhile, the US dollar index (DXY) is surging higher on expectations of a 50-basis point (bps) interest rate hike in March’s monetary policy meeting. Although Federal Reserve (Fed) Chair Jerome Powell in his latest testimony underpinned a 25 bps rate hike but kept the door open for more tightening policy. The odds advocating the Fed’s 0.50% rate hike in March remained firmer, recently at 94% per the CME’s FedWatch Tool. While the 10-year US Treasury yields jumped 3.18% on Monday amid rising odds of an aggressive interest rate policy by the Fed.

This week, the US inflation numbers will hog the limelight. The US Consumer Price Index (CPI) numbers are likely to print at 7.9% higher than the earlier print of 7.8%, which may trigger the Fed to resort to an aggressive interest rate decision. However, the headlines from the Kremlin-Kyiv war will remain the major driver.