The USD/CHF currency pair saw an uptick, trading around 0.8525 during early European hours on Tuesday, buoyed by a stronger US Dollar (USD). This movement came amid a backdrop of mixed economic data from Switzerland and anticipation of forthcoming US economic indicators.
In August, Switzerland’s Consumer Price Index (CPI) rose by 1.1% year-over-year, a slight decrease from the previous month’s 1.3% and below the anticipated 1.2%. Monthly CPI remained flat in August, failing to improve from July’s 0.2% decline and falling short of the expected 0.1% increase.
Conversely, Switzerland’s economy demonstrated stronger-than-expected growth in the second quarter (Q2) of 2024. The Swiss Gross Domestic Product (GDP) grew by 0.7% quarter-over-quarter, surpassing the previous 0.5% expansion and exceeding forecasts. Despite this robust GDP performance, the Swiss Franc (CHF) did not react positively, reflecting the market’s mixed sentiment.
On the US side, higher Treasury bond yields have provided support to the Greenback. However, the potential upside of the USD/CHF pair may be capped as investors anticipate a Federal Reserve interest rate cut in September. The forthcoming US August Nonfarm Payrolls (NFP) report on Friday is expected to offer further insights into the pace and magnitude of potential Fed rate cuts. Current market expectations, according to the CME FedWatch tool, suggest a 69% probability of a 25 basis points rate cut and a 31% chance of a 50 basis points reduction by the Fed in September.
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