USD/CHF has gained traction, trading around 0.8680 in early European hours on Wednesday, bolstered by a robust US Dollar and rising US Treasury yields. The US Dollar Index (DXY) is near a two-month high at 104.30, with 2-year and 10-year Treasury yields at 4.05% and 4.22%, respectively.
Recent economic data and concerns about a potential inflation rebound in the US have diminished expectations for a significant interest rate cut by the Federal Reserve in November. The CME FedWatch Tool indicates an 89% probability of a 25-basis-point reduction, with no anticipation for a larger cut. Federal Reserve Bank of San Francisco President Mary Daly highlighted improvements in the economy and a stabilizing labor market.
Conversely, market analysts foresee another interest rate cut by the Swiss National Bank (SNB) in December, following a recent reduction to 1%. This dovish outlook is reinforced by ongoing declines in Swiss inflation.
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