The USD/CHF pair climbed to approximately 0.8770 on Monday, marking its highest level since August 1 during early European trading hours. This advance is driven by the U.S. Dollar’s (USD) strength as markets prepare for critical U.S. inflation data and comments from Federal Reserve (Fed) officials later in the week.
Market expectations that policies under U.S. President-elect Donald Trump could increase U.S. inflation and bond yields are providing a tailwind for the Greenback against the Swiss Franc (CHF). Analysts suggest this pressure may prompt a slower pace of Fed rate cuts. Michael Feroli, an economist at JPMorgan, noted, “We still expect that the Fed will cut another 25 basis points in December, but thereafter will only cut once per quarter, rather than at every meeting.”
Traders are now focused on Wednesday’s U.S. Consumer Price Index (CPI) report. Analysts expect headline CPI to rise by 2.6% year-over-year (YoY) for October, with core CPI estimated to increase by 3.3% YoY. A higher-than-expected inflation result could diminish prospects for a Fed rate cut in December, further supporting the USD.
In Switzerland, Swiss National Bank (SNB) Vice Chairman Antoine Martin indicated that the SNB is not bound to cut rates in December. He emphasized that any decision will depend on the economic conditions reviewed at the December meeting. Still, markets widely expect a 25-basis-point cut, which would lower the SNB’s rate from the current 1% level at its December 12 session.
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