As the USD/CHF continues to decline, trading around 0.8430 during Asian hours, investors are awaiting the release of US Consumer Price Index (CPI) data later today. The Treasury yields are on the decline, posing challenges for the US Dollar (USD) ahead of the inflation report.
The CME FedWatch Tool indicates that markets are fully pricing in at least a 25 basis point Fed rate cut in September. The likelihood of a 50 bps rate cut has slightly decreased to 31.0%. Federal Reserve Bank of Chicago President Austan Goolsbee’s recent comments align with the market sentiment, suggesting an imminent policy rate adjustment by the US central bank.
In Switzerland, inflation has dropped to a five-month low, sparking speculation of another rate cut by the Swiss National Bank (SNB) in the near future. Traders are keeping a close watch on any speeches from SNB members this week, as no major economic releases are scheduled.
Analysis:
The USD/CHF pair is facing downward pressure as investors anticipate the release of US CPI data and a potential Fed rate cut in September. The Swiss Franc’s upside may be restricted due to the likelihood of an SNB rate cut. Investors should monitor inflation reports and central bank speeches for further insights into market movements and potential trading opportunities.