The USD/CHF pair maintained its position around 0.8940 during the Asian session on Wednesday, potentially supported by a modest rebound in the US Dollar (USD) influenced by improved Treasury yields.
Fed‘s Stance and Upcoming Data
Federal Reserve (Fed) Board of Governors member Dr. Adriana Kugler recently remarked that although inflationary pressures have eased, the Fed requires more data to justify a rate cut. Dr. Kugler suggested that if forthcoming data fails to demonstrate progress towards the 2% inflation target, maintaining current rates for a longer period may be necessary.
Market participants are now focused on key US economic data and the Fed Beige Book, both set for release on Wednesday, along with speeches from Fed officials Thomas Barkin and Christopher Waller. These events are likely to offer further insights into the Fed’s monetary policy direction.
Swiss Economic Indicators and SNB Policies
On the Swiss front, the attention will shift to Trade Balance data due on Thursday. Additionally, the 10-year Swiss government bond yield continued its decline, nearing 0.54%—its lowest level since August 2022—mirroring a similar trend in US bond yields. This movement followed comments from Fed Chair Jerome Powell, which bolstered expectations for a rate cut by the Fed in September.
On Monday, Fed Chair Powell indicated that recent US inflation data “add somewhat to confidence” that inflation is progressing towards the Fed’s target sustainably, suggesting that interest rate cuts could be on the horizon.
Meanwhile, the Swiss National Bank (SNB) reduced its key interest rate by 25 basis points for the second consecutive meeting in June. This decision was driven by subdued inflationary pressures and the resilience of the Swiss Franc (CHF).
Conclusion
The USD/CHF pair’s performance remains closely tied to US and Swiss economic indicators and central bank policies. As market participants digest the latest Fed and SNB moves, along with upcoming economic data, these factors will likely continue to influence the pair’s trajectory in the near term.
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