The USD/CHF currency pair has broken its four-day losing streak, trading around 0.8470 during the early European session on Monday. The US Dollar (USD) found support following Friday’s economic data, which cast doubt on the likelihood of a more aggressive interest rate cut by the Federal Reserve (Fed) in its September meeting.
According to the CME FedWatch Tool, markets are currently pricing in a 25 basis point (bps) rate cut by the Fed. The probability of a 50 bps cut has slightly decreased to 29.0%, down from 30.0% the previous week.
Federal Reserve Bank of Chicago President Austan Goolsbee indicated on Friday that Fed officials appear to be aligning with market expectations for a policy rate adjustment. However, FXStreet’s FedTracker, which assesses Fed officials’ comments on a dovish-to-hawkish scale, rated Goolsbee’s remarks as dovish with a score of 3.2.
In Switzerland, the Swiss National Bank (SNB) reported a decrease in foreign currency reserves to CHF 694 billion in August, down from CHF 704 billion in July. This marks the fourth consecutive monthly decline, suggesting ongoing SNB intervention to support the Swiss Franc (CHF).
Switzerland’s inflation rate fell to 1.1% year-on-year in August, its lowest in five months, down from 1.3% in July and below the market expectation of 1.2%. This drop has fueled speculation about a potential rate cut by the SNB in the near future.
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