The USD/CHF pair recovered near 0.8940 during early European trading on Friday, breaking a two-day decline driven by a stronger US Dollar. The recovery was bolstered by a hawkish Federal Reserve projection suggesting only one rate cut is likely in 2024, boosting investor sentiment towards the Greenback.
Investors are now focused on the upcoming preliminary US Michigan Consumer Sentiment report and a speech by Fed Bank of Chicago President Austan Goolsbee later in the day, which are expected to provide further market direction.
On Thursday, US economic data showed a modest increase in the Producer Price Index (PPI), with the YoY figure rising 2.2% in May, slightly below market expectations. Despite softer economic indicators, the Fed’s hawkish stance on interest rates supported the USD and limited downside pressure on the USD/CHF pair.
According to the Fed’s dot plot, policymakers signaled a single 25 basis points rate cut toward the end of 2024, maintaining rates at a 23-year high despite easing inflation pressures.
Meanwhile, in Switzerland, the Federal Statistical Office reported a 0.3% month-over-month drop in Producer and Import Prices for May, contrasting with expectations of a 0.5% increase. Anticipation mounts ahead of the Swiss National Bank’s (SNB) June interest rate decision, with expectations leaning towards unchanged rates, potentially boosting the Swiss Franc (CHF).
Geopolitical tensions in the Middle East are also underpinning safe-haven flows, further supporting the CHF in the near term.
The USD/CHF pair remains sensitive to upcoming economic data releases and central bank speeches, which could provide fresh impetus and dictate the pair’s direction in the sessions ahead.
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