In Wednesday’s Asian session, the USD/CHF pair discovered temporary support around the 0.8900 level. The outlook for the Swiss Franc appears to be under pressure as the recovery in the US Dollar (USD) shows signs of faltering amidst growing speculation that the Federal Reserve (Fed) will commence interest rate reductions starting from the September meeting.
Market sentiment leans favorably towards risk-perceived assets, buoyed by firm hopes of Fed rate cuts. S&P 500 futures have recorded notable gains during the Asian session. The US Dollar Index (DXY), which tracks the Greenback’s performance against six major currencies, is consolidating near a nearly two-month low of around 104.00.
Traders are increasingly positioning themselves for the likelihood of the Fed lowering current interest rates, attributing this expectation to the weakening US economic outlook. This sentiment stems from a weak US ISM Manufacturing PMI report and downward revisions in Q1 Gross Domestic Product (GDP) data.
Looking ahead, investor attention shifts towards key economic indicators such as the US ADP Employment Change and the ISM Services PMI data for May, scheduled for publication at 12:15 and 14:00 GMT respectively. Economists anticipate private employers to have hired 173K job-seekers, lower than the previous reading of 192K. The Services PMI, a crucial gauge of service sector activity representing two-thirds of the economy, is expected to signal expansion, with a forecasted figure of 50.5, surpassing the previous release of 49.4.
On the Swiss front, the Swiss Franc exhibits strength amid expectations that the Swiss National Bank (SNB) may intervene in currency markets to bolster the currency. The weakened currency has rendered Swiss exports more competitive in global markets, amplifying concerns of potential inflationary pressures.
Meanwhile, the Swiss annual and monthly Consumer Price Index (CPI) exhibited steady growth, increasing by 1.4% and 0.3% respectively in May. However, monthly inflation fell short of estimates, registering at 0.3% compared to the anticipated 0.4%.
Related Topics:
