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15 Mar 2023

USD/CHF reversed its course and surged nearby 0.9300 on Credit Suisse’s risk aversion

  • USD/CHF rallied on deteriorated market sentiment spurred by banking contagion fears.
  • Retail Sales in the United States contracted while inflation on the producer side eased.
  • IF needed, the Swiss National Bank would act as a liquidity provider for Credit Suisse.

USD/CHF soars sharply as sentiment shifts sour on fears that the United States (US) banking crisis could spread globally. On Wednesday, Credit Suisse (CS) stock plunged 24% in an interview with one of its top shareholders, saying they won’t increase their stake at the bank due to regulation. At the time of writing, the USD/CHF is trading at 0.9287, up by 1.61% or 145 pips.

Swiss Franc collapses on Credit Suisse fall

The market sentiment remains sour, as portrayed by Wall Street, extending its losses. Credit Suisse’s sell-off continued in the European session, while the bank’s Credit Default Swaps (CDS) “ spiked to levels that signal Credit Suisse is in deep financial distress,” according to Bloomberg. Therefore, the CBOE Volatility Index (VIX) increased and reached a high of 30.81 before easing to current levels of 27.16.

The US economic docket featured Retail Sales for February. Figures came at -0.4% MoM, exceeding estimates for a 0.3% contraction. Although the data was negative, data showed American consumers’ resilience to spend. On another tranche of data, the Department of Labor (DoL) revealed the Producer Price Index (PPI) for February, in headline and core figures, were below estimates. That shows that the cumulative tightening of the Federal Funds rate (FFR) is working, despite the tightness of the labor market.

Therefore, safe-haven flows bolstered the US Dollar (USD), with the US Dollar index advancing 1.13%, at 104.836. However, US Treasury bond yields have been punished by investors, with US 2s and 10s extending their losses, each down by 37 basis points (bps) and 24 bps, respectively, at 3.889% and 3.453%.

Aside from this, the latest news crossing wires said that the Swiss Regulator FINMA would likely make a statement on Credit Suisse soon.

As of typing, the Swiss National Bank and the Swiss Financial Market Supervisory Authority issued a statement. It says: “Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks. If necessary, the SNB will provide Credit Suisse with liquidity.”

USD/CHF Technical levels

 

 
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Mar 15, 2023

SNB and FINMA: If necessary, the SNB will provide Credit Suisse with liquidity

Credit Suisse shares tumbled on Wednesday amid increasing difficulties following the collapse of two US banks. The Swiss National Bank (SNB) and the S
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