USD/CHF Forecast: Fed Rate Cuts Weigh on Dollar as Harris Gains Momentum
The USD/CHF pair is facing downward pressure, trading in the 0.8850s amid expectations of multiple Fed interest rate cuts in 2024. The weakening US Dollar is being influenced by a series of disappointing data releases and the rising popularity of Kamala Harris.
The CME FedWatch Tool indicates a 95% probability of a rate cut in September, with two more cuts expected by the year’s end. This anticipation is dampening the USD and causing it to slip against the Swiss Franc (CHF).
Furthermore, the news of Kamala Harris securing enough delegates for the Democratic nomination has led to a shift in market sentiment, with some unwinding of the "Trump trade" and a consequent impact on US yields and the USD.
Meanwhile, the Swiss National Bank has recently reduced its key policy rate, citing lower inflation driven by the strong CHF. Inflation in Switzerland is currently being fueled by increased domestic service prices.
Looking ahead, USD/CHF traders are awaiting key US economic data releases, including Q2 GDP growth figures, the PCE Price Index report for June, and the preliminary July S&P Global PMI data. Positive surprises in these reports could potentially delay further Fed rate cuts, providing support for the USD/CHF pair.
On the Swiss front, trade surplus data has bolstered the CHF, with exports showing an increase driven by vehicle and chemical-pharmaceutical sales.
In summary, the USD/CHF pair is facing downward pressure due to expectations of Fed rate cuts and political developments, while upcoming economic data releases will be crucial in determining the future direction of the pair. Traders should closely monitor these factors to make informed decisions in the forex market.