USD/CHF dips back under 0.9300 Ukraine headlines, but still probing multi-week highs

• USD/CHF dips back below 0.9300 level in choppy, headline-driven trading conditions, but still trades 0.4% higher on the day.
• The pair pulled back on headlines that Ukraine is no longer insisting on NATO membership, sparking ceasefire hopes.

After momentarily rallying to more than one-month highs above the 0.9300 level, a sudden jolting improvement in risk appetite as a result of headlines suggesting Ukraine is no longer insisting on NATO membership saw USD/CHF drop back to the 0.9280s. That still leaves it higher by more than 0.3% on the day, with traders assessing the latest shift in Ukraine’s stance on NATO as insufficient to meet Russian demands for a ceasefire.

Prior to these headlines, the major focus of the day was on new Western sanctions on Russia, with the US banning all Russian energy imports and the UK announcing plans to quickly phase out imports. While the latest Ukraine headlines have prompted a pullback in the prices of major commodities from earlier session highs, there hasn’t exactly been a big reversal lower either. For that reason, for now, the US dollar is likely to retain a decent safe-haven bid.

That suggests USD/CHF might well remain well supported near the 0.9300 level and close to multi-week highs. The USD has other factors going for it that also favour its against its fellow safe-haven CHF peer. Amid elevated US inflation (data on Thursday will be a reminder of this), the Fed will remain on course to tighten policy significantly over the coming quarters. Moreover, the US is a net energy exporter, shielding the US dollar from the negative impact of higher oil prices, something that CHF cannot count on.