The USD/CHF pair remained in positive territory for the fourth consecutive day, trading around 0.8835 during the early European session on Wednesday. The pair’s upward movement is supported by a stronger US Dollar, fueled by increasing expectations of a less dovish stance from the US Federal Reserve (Fed). Market participants are awaiting the release of the US Consumer Price Index (CPI) for November, scheduled later on Wednesday, which is expected to influence future Fed policy.
Wednesday’s CPI data will be the final major indicator the Fed will consider before its December meeting, where it is widely anticipated to reduce interest rates by 25 basis points. Current market expectations for a rate cut are high, with 86% of traders pricing in the likelihood of a 25 basis-point reduction, according to the CME FedWatch Tool. A modest rise in inflation is unlikely to sway the Fed from its decision to ease monetary policy.
On the Swiss side, traders are focused on the Swiss National Bank (SNB) rate decision due Thursday. The SNB is expected to announce a quarter-point rate cut, bringing the benchmark rate down to 0.75%. While some analysts suggest that such a move could be viewed as a “hawkish surprise” given Switzerland’s resilient economy and stable exchange rate, there is little expectation of more aggressive cuts. Christian Schulz, deputy chief European economist at Citi, stated that larger rate cuts would be unlikely to succeed in terms of managing the exchange rate, though he anticipates the SNB to revise its short-term economic forecasts lower. Despite this, he expects the Swiss central bank to maintain a dovish stance in its guidance.
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