Swiss Franc picks up within range, USDollar softens awaiting Fed minutes

• USD/CHF retraces previous gains and dips towards 0.8100 after rejection at 0.8130.
• The US Dollar loses ground as the market braces for the release of the Fed's minutes.
• Rabobank experts observe that the SNB's dovish monetary policy has deprived the CHF of its safe-haven status.

The Swiss Franc (CHF) appreciates moderately on Wednesday, as the US Dollar (USD) pulls back against major peers, with investors bracing for the release of the minutes of July’s Federal Reserve (Fed) monetary policy meeting, due later on the day. The USD/CHF pair has retreated to levels nearing 0.8100, from 0.8130 on Tuesday, although it remains well above August’s trading floor, in the 0.8040 area.

Market volatility remains subdued on Wednesday’s European session, with a mild risk-off mood prevailing, amid the high level of uncertainty surrounding the Middle East conflict and with Oil prices on the rise, which is keeping the US Dollar from retreating further.

Fed minutes are likely to set the US Dollar's direction

The highlight of the day on Wednesday will be the release of the Federal Market Open Committee's (FOMC) meeting minutes, due in the US session. The central bank kept interest rates on hold, amid a divided committee, and left investors in the dark regarding forward guidance in that meeting.

Commerzbank’s Antje Praefcke underscores that the lack of “clear statements in the press release and at the press conference following the Fed meeting” means “the market might try to learn a little more about the discussions among FOMC members,” as participants seek additional insight into policymakers’ thinking on the future rate path and the scope for any renewed Dollar support.

Regarding the Swiss Franc, FX analysts at Rabobank observe that “the combination of intervention threats and zero policy rates has certainly appeared to dilute the appeal of the CHF as a safe haven currency in recent months.” Looking ahead, Rabobank does not see reasons to think of a radical change of scenario: "The market sees little danger of an SNB rate hike in the next 12 months,” reinforcing the perception that Swiss rates are likely to remain anchored and further diminishing the currency’s defensive allure.