Currencies in range-bound conditions

The forex market has been rather subdued today, with most currency pairs moving in range-bound conditions. There is this sense of great uncertainty in the financial markets right now, including stock markets worldwide, and this nervousness stems from the House-of-Cards situation in the US. Aside from that, inflation is the other issue, and based on the just-released US producer prices, it seems that inflation is still a risk in the US. US wholesale prices...

spiked higher in February for the third time in four months due to big jumps in food and energy, but prices rose even excluding these volatile factors. The producer price index rose 1.3% (0.6% expected) and the core PPI increased 0.4% (0.2% expected) - twice the previous month's gain.

All these suggest that price pressures are still on an upward path.

Meanwhile, the Swiss central bank raised interest rates today for the sixth time since late 2005. The benchmark three-month Libor target rate is raised from 2% to 2.25%. The bank also raised its inflation forecast for this year and next.

However, the near-term direction of USD/CHF will largely depend on the outlook of the US economy rather than the inflation outlook of Switzerland.