The USD/CHF currency pair continued its decline, trading around 0.8430 during the Asian trading hours on Wednesday. The US Dollar (USD) is facing pressure as Treasury yields drop ahead of the release of the US Consumer Price Index (CPI) data later today.
The forthcoming inflation report is expected to provide new insights into the potential size of the Federal Reserve’s (Fed) interest rate cut in September. Recent US labor market data has introduced uncertainty about the likelihood of a more aggressive rate cut by the Fed.
According to the CME FedWatch Tool, markets are currently pricing in a minimum of a 25 basis point (bps) rate cut by the Federal Reserve at its September meeting. However, the probability of a 50 bps rate cut has slightly decreased to 31.0%, down from 38.0% a week prior.
Chicago Fed President Austan Goolsbee noted on Friday that Fed officials are increasingly aligning with market expectations of an imminent policy rate adjustment. FXStreet’s FedTracker, which rates Fed officials’ comments on a dovish-to-hawkish scale, rated Goolsbee’s remarks as dovish, with a score of 3.2.
In Switzerland, inflation has fallen to a five-month low, sparking speculation about a potential rate cut by the Swiss National Bank (SNB) in the near future. With no major economic releases scheduled for this week, traders will be closely watching for any statements from SNB officials.
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