Swiss franc snoozing

The Swiss franc flexed some muscle in the days leading into Christmas, but the currency is almost unchanged this week, trading around 0.9170.

Swiss franc steady despite Omicron 

The Omicron variant continues to spread as countries scramble to deal with the newest wave of Covid. The good news is that most reports have shown that Omicron is believed to be far milder than Delta, which hopefully means that this latest Covid wave will not cause as much devastation as Delta. However, there is no question that Omicron is far more contagious than Delta and poses a serious health hazard to unvaccinated people, which could potentially overload hospitals.

The markets are extremely reactionary now, especially this week with many market participants on holiday and the markets marked by illiquidity. We are seeing sharp moves from risk currencies such as the Australian dollar, while USD/CHF, both of which are safe-haven assets, have showed limited movement. It’s a light economic calendar this week, but there are two Swiss events that could have an impact on the movement of the Swiss franc – Credit Suisse Economic Expectations on Wednesday and the KOF Economic Barometer on Thursday.

The uncertainty surrounding Omicron has captivated the market’s attention, overshadowing other issues such as a Federal Reserve rate hike. The equity markets have been on the rise, buoyed by reports that Omicron is less severe than Delta and may not impact the US economy as much as feared. The US consumer is spending and unemployment is at low levels, which has kept the recovery going strong. Fed Watch has priced in a 53% chance of a 25-bps hike in March, and the odds of a rate hike will surely change based on the impact of Omicron on the US economy.

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USD/CHF Technical

• There is weak support at 0.9161, followed by support at 0.9247
• USD/CHF faces resistance at 0.9247 and 0.9294

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