During the European trading session on Monday, the USD/CHF pair retraced its recent gains, hovering around 0.9120. The decline comes as the US Dollar (USD) weakens, potentially signaling a move towards a risk-on sentiment, which has exerted downward pressure on the currency pair.
Analysts anticipate that the US Federal Reserve (Fed) will maintain its current interest rate range of 5.25%–5.5% in the forthcoming policy meeting on Wednesday. This expectation is primarily driven by concerns surrounding heightened inflationary pressures. Furthermore, the latest data on the US Core Personal Consumption Expenditures (PCE) Price Index for March indicated an uptick, reinforcing the likelihood of delayed rate adjustments until September. According to the CME FedWatch Tool, there’s an increased probability of the Fed holding rates steady in the June meeting, standing at 87.7%, up from last week’s 81.7%.
Meanwhile, at the SNB‘s General Meeting of Shareholders on Friday, Chairman Thomas J. Jordan underscored the central bank‘s vigilance regarding inflation. Jordan reiterated the SNB’s readiness to lower interest rates if deemed necessary. In a move that surprised markets in March, the SNB lowered its main policy rate by 0.25 percentage points to 1.5%.
Chairman Jordan acknowledged the SNB’s effective measures in curbing inflation but cautioned against prevailing uncertainty and the potential for unforeseen shocks. He stressed the paramount importance of maintaining focus on ensuring price stability and cautioned against calls to expand the SNB’s mandate, labeling such propositions as precarious.
Investor attention is expected to turn to the Consumer Price Index (CPI) data slated for release by the Swiss Federal Statistical Office on Thursday. The CPI data serves as a critical gauge for measuring inflationary trends and shifts in purchasing behavior within Switzerland.
