The USD/CHF pair edged lower to around 0.8490 during early European trading on Monday, as the US Dollar weakened amid rising speculation that the Federal Reserve may cut interest rates in its upcoming September meeting. Market sentiment has been influenced by the Fed‘s dovish stance, particularly after Atlanta Fed President Raphael Bostic, a known hawk, suggested that it might be time to lower borrowing costs due to cooling inflation and an unexpectedly high unemployment rate.
Adding to the downward pressure on the USD, Alex Ebkarian, Chief Operating Officer at Allegiance Gold, noted that the recent Personal Consumption Expenditures (PCE) report confirmed that inflation is no longer the Fed’s primary concern, with the focus shifting to unemployment data. This shift further supports the possibility of a rate cut in September.
Investors are now closely monitoring the upcoming US employment data, including Nonfarm Payrolls (NFP), the Unemployment Rate, and Average Hourly Earnings for August, set to be released on Friday. The NFP is expected to show 163,000 job additions, while the Unemployment Rate is forecasted to dip slightly to 4.2%. Any signs of weakness in the US labor market could reinforce expectations of a Fed rate cut, increasing selling pressure on the USD.
On the Swiss front, key economic indicators are scheduled for release on Tuesday, including the August Consumer Price Index (CPI) and Gross Domestic Product (GDP) for the second quarter. The Swiss economy is projected to grow by 0.5% quarter-on-quarter in Q2.
Meanwhile, ongoing geopolitical tensions in the Middle East could bolster the safe-haven appeal of the Swiss Franc (CHF). Reports early Monday from CNN indicated that protests have erupted across Israel after the country’s military recovered the bodies of six hostages allegedly killed by Hamas in Gaza. Israel’s largest labor union has called for a nationwide strike, threatening to shut down the entire Israeli economy.
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