USD/CHF oscillates around 0.9700 on soaring hawkish Fed bets, US PMI in focus

• USD/CHF is auctioning in a 0.9687-0.9712 range as investors await US PMI.
• The SNB elevates its interest rates by 50 bps for the first time in the last 15 years.
• Both Manufacturing and Services PMI are expected to fall on renewed recession fears in the US.

The USD/CHF pair is displaying back and forth moves in a narrow range of 0.9687-0.9712 in the early Tokyo session. On a broader note, the asset has rebounded firmly after re-testing its previous lows at 0.9629 with lower selling pressure. The greenback witnessed extreme selling pressure against the Swiss franc last week after the Swiss National Bank (SNB) announced a rate hike by 50 basis points (bps) on Thursday.

Officially, the interest rates by the SNB have reached -0.25%. For the last 15 years, the SNB was maintaining a steady stance on the interest rates to make the Swiss franc less attractive as it will bring more business to the Swiss economy. Considering the inflation shocks, the SNB has followed the footprints of other Western leaders and has announced a jumbo rate hike. An unexpected announcement of a rate hike by SNB chair Chris Jordan has cleared that the Swiss franc is not overvalued anymore and higher interest rates will support the Swiss franc bulls going forward.

Meanwhile, the US dollar index (DXY) is trading lackluster in the Asian session at around 104.66 despite rising chances of a consecutive 75 basis points (bps) rate hike announcement by the Federal Reserve (Fed). Price pressures will take a little longer time to get converted into price stability. Going forward, investors' focus will remain on the US PMI numbers.

The Composite PMI is seen higher marginally to 53.5 from the prior print of 53.4. The bifurcation of the Composite PMI into the Manufacturing and Services dictates an underperformance. The Services PMI is seen extremely lower at 49.1 against the prior print of 53.2. While the Manufacturing PMI is expected to slip to 54.7 from the former figure of 55.7.