The USD/CHF currency pair has retraced some of its recent gains, trading around 0.8450 during the Asian session on Wednesday. The US Dollar (USD) faces headwinds as expectations rise that the US Federal Reserve (Fed) may announce a significant 50 basis point rate cut in its September meeting, scheduled for later in the North American session.
According to the CME FedWatch Tool, the probability of a 25 basis point rate cut has been assigned at 33.0%, while the likelihood of a 50 basis point reduction has increased to 67.0%, up from 62.0% the previous day.
JP Morgan CEO Jamie Dimon commented on Tuesday that whether the Fed cuts rates by 25 or 50 basis points, the effect will be “not earth-shattering.” Dimon noted that while such adjustments are necessary, their impact is relatively minor within the broader economic context, emphasizing that “there’s a real economy” beyond the Fed’s rate changes, as reported by Bloomberg.
US Retail Sales data released on Tuesday showed a 0.1% increase month-over-month for August, following a revised 1.1% growth in July. This result exceeded expectations of a 0.2% decline, signaling robust consumer spending. Additionally, the Retail Sales Control Group rose by 0.3%, slightly below the previous month’s 0.4% increase.
In Switzerland, traders are awaiting the Trade Balance data set for release on Thursday, which may offer key insights into the Swiss economic landscape. The strong performance of the Swiss Franc (CHF) has fueled speculation that the Swiss National Bank (SNB) could lead major central banks with a significant rate cut this year. Economists forecast that the SNB may announce a 25 basis point rate cut in its September meeting.
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