The USD/CHF pair is trading in positive territory for the fourth consecutive day, hovering around 0.8830 during the early European session on Wednesday. The rally in the US Dollar (USD), fueled by optimism surrounding US President-elect Donald Trump’s economic policies, continues to provide support for the pair.
Trump’s fiscal agenda has helped bolster the USD and lift US Treasury yields, with markets now adjusting expectations for future Federal Reserve (Fed) rate cuts. According to the CME FedWatch Tool, there is now a 62.4% probability of a 25 basis point rate cut by the Fed in December, down from 75% last week.
Attention is shifting to the US Consumer Price Index (CPI) data for October, set to be released later today. Analysts expect the headline CPI to rise by 2.6% year-on-year (YoY), up from the previous 2.4%, while the core CPI is projected to hold steady at 3.3% YoY. On a monthly basis, CPI is forecasted to increase by 0.2%, with core CPI rising 0.3%.
A downside surprise in the CPI could reduce expectations for a December rate cut, potentially exerting downward pressure on the USD. Conversely, stronger-than-expected CPI data could lead markets to revise their rate cut expectations, providing further strength to the US Dollar.
Meanwhile, the Swiss Franc (CHF) could see support from safe-haven flows amid growing uncertainty regarding the potential impact of tariffs under the upcoming Trump administration, as well as ongoing geopolitical tensions in the Middle East. These factors may limit further upside in the USD/CHF pair.
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