The USD/CHF pair is on a winning streak, trading around 0.8500, as market sentiment turns dovish on the Federal Reserve’s policy outlook. The CME’s FedWatch Tool shows a 74.5% chance of a 50-basis point rate cut in September, up from 11.5% a week ago.
Stable inflation in Switzerland has also raised expectations of a third consecutive rate cut by the Swiss National Bank in September, further supporting the USD/CHF pair’s downward trend.
Recent disappointing US jobs data and a sharp decline in the ISM Manufacturing PMI have fueled speculation of a significant rate cut by the Fed in September. US Nonfarm Payrolls for July came in below expectations at 114K, while the ISM Manufacturing PMI dropped to an eight-month low of 46.8.
Swiss inflation remains steady at 1.3% year-over-year, reinforcing the likelihood of further easing by the SNB. The 10-year Swiss bond yield has also hit a two-year low of 0.37%, signaling the central bank’s proactive approach to monetary policy.
Looking ahead, traders are awaiting key data releases from Switzerland, including the July Unemployment Rate and June Real Retail Sales, which could provide additional insights into the Swiss economy and influence the SNB’s future decisions.
Analysis:
The USD/CHF pair is experiencing a bullish trend due to the dovish stance of the Federal Reserve and the Swiss National Bank. The increase in odds of a 50-basis point rate cut by the Fed and stable inflation in Switzerland are driving forces behind the pair’s movement. Traders should monitor upcoming economic data releases to gauge the impact on the USD/CHF exchange rate and adjust their investment strategies accordingly.