During the early European session on Monday, USD/CHF was seen retracing recent gains around 0.8930. This movement coincided with a slight decline in the US Dollar Index (DXY) to approximately 105.70, influenced by lower yields on US Treasury bonds—specifically 4.73% for the 2-year and 4.25% for the 10-year bonds.
The US Dollar’s downward correction may find some limitation, as last Friday’s higher-than-expected US Purchasing Managers Index (PMI) has bolstered speculations of a delayed interest rate cut by the Federal Reserve. Currently, the market assigns a 65.9% probability of a rate cut in September, down from 70.2% a week earlier according to the CME FedWatch Tool.
June’s US Composite PMI surpassed expectations, reaching 54.6, the highest level since April 2022. Both the Manufacturing PMI (51.7) and Services PMI (55.1) exceeded forecasts, reflecting positive economic sentiment.
Meanwhile, the Swiss Franc faced pressure against the US Dollar following the Swiss National Bank’s (SNB) recent rate cut from 1.50% to 1.25% last Thursday. SNB Chairman Thomas Jordan highlighted concerns over the CHF’s recent strength and indicated readiness to intervene in the foreign exchange market, potentially supporting USD/CHF.
Looking ahead, traders are likely to monitor the ZEW Survey Expectations from the Centre for European Economic Research on Wednesday, which will provide insights into business and employment conditions in Switzerland.
This context outlines the current dynamics influencing the USD/CHF pair amid broader economic indicators and central bank actions.
Related Topics:
