USD/CHF appreciates to near 0.8950 due to hawkish Fed, SNB Financial Stability Report eyed

• USD/CHF gained ground as FOMC left its benchmark lending rate in the range of 5.25%–5.50% on Wednesday.
• Powell stated, “We don't see ourselves as having the confidence that would warrant policy loosening at this time.”
• Swiss Franc may see limited downside as SNB is unlikely to implement a rate cut in June.

USD/CHF retraces its losses from the previous session after the hawkish hold from the US Federal Reserve (Fed). The Federal Open Market Committee (FOMC) left its benchmark lending rate in the range of 5.25%–5.50% for the seventh consecutive time in its policy meeting on Wednesday, as widely anticipated. The pair edges higher to near 0.8950 during the Asian session on Thursday.

However, the Greenback faced challenges after the release of the softer inflation figures from the United States (US). The US Consumer Price Index (CPI) rose 3.3% year-over-year in May, slightly below both the previous reading and expectations of 3.4%. The core CPI, which excludes volatile food and energy prices, increased by 3.4% year-over-year in May, compared to a 3.6% rise in April and an estimated 3.5%.

In a press conference following the Fed's decision, Fed Chair Jerome Powell noted that the restrictive stance on monetary policy is having the expected effect on inflation. "So far this year, we have not gained greater confidence on inflation to warrant a rate cut," Powell added.

On the Swiss side, the Swiss National Bank (SNB) is unlikely to implement an interest rate cut in June, which is likely to provide support for the Swiss Franc (CHF). Previously, SNB Chairman Thomas J. Jordan warned of minor upside risks to inflation expectations.

Traders are anticipating the SNB Financial Stability Report on Thursday, which will offer an assessment of the banking sector's stability and the financial market infrastructure. Additionally, attention will be on Producer and Import Prices data.