In the early stages of European trading on Wednesday, the USD/CHF pair is exhibiting strength around the mid-0.8800s. The anticipated testimony of Federal Reserve Chairman Jerome Powell at Capitol Hill later in the day is poised to be a focal point for investors. Hawkish sentiments from Powell could propel the US Dollar (USD) against its counterparts, with USD/CHF currently trading at 0.8845, marking a 0.15% gain for the day.
Market participants are closely monitoring the expectations surrounding the Federal Reserve’s potential rate cuts. According to the CME FedWatch Tools, financial markets anticipate rate cuts to commence in the June meeting, with a forecast of four quarter-percentage-point cuts throughout the year. However, the timing remains uncertain, as Fed officials express a preference for additional data before initiating any interest rate adjustments.
Tuesday’s release of the US ISM Services PMI revealed mixed economic indicators. While the overall index fell to 52.6 in February from the previous month’s 53.4, the New Orders Index demonstrated improvement, rising to 56.1. Conversely, the Employment Index dipped to 48.0 from 50.5, and the Prices Paid Index declined to 58.6 from the previous reading of 64.0.
Earlier in the week, Switzerland reported a Consumer Price Index (CPI) for February, revealing a year-on-year decrease to 1.2% from January’s 1.3%. Although this figure exceeded the market estimate of 1.1%, it represented the lowest inflation rate since October 2021. The upcoming meeting of the Swiss National Bank (SNB) on March 21 will play a crucial role in determining the central bank‘s stance on interest rates, influenced by economic conditions in February. Investors will be closely monitoring any developments that may impact the USD/CHF pair in the wake of Powell’s testimony and the SNB meeting.
