CFD Trading Rate US Dollar vs Swiss Franc (USDCHF)

• USD/CHF extends losses for the third successive session on Thursday.
• The higher January’s US CPI and PPI data prompts the Fed to prolong elevated borrowing costs.
• SNB is expected to policy easing cycle from March as the country’s inflation drops.

USD/CHF continues to lose ground for the third consecutive session on Thursday. The decline in the US Dollar (USD) contributes to undermining the USD/CHF pair, trading around 0.8780 during the Asian hours on Thursday.

The Federal Open Market Committee (FOMC) Minutes revealed policymakers' apprehension regarding the timing of interest rate cuts, suggesting that policy easing will not commence in the upcoming monetary meetings. This stance may be influenced by the higher Consumer Price Index (CPI) and Producer Price Index (PPI) figures from January, along with robust February employment data.

Market participants have largely abandoned expectations for any interest rate cuts in March and May, but they persist in speculating that the first cut will occur in June. According to the CME FedWatch Tool, there's a 52.2% probability of a 25 basis points (bps) rate reduction in June.

On the Swiss side, the market anticipates that the Swiss National Bank (SNB) will commence a rate-cut cycle starting from March. This expectation arises as the country's inflation has decreased despite market forecasts of higher prices. The decline in inflation could be attributed to the phasing out of electricity subsidies and the restructuring of value-added tax policies.

The Swiss Franc (CHF) received upward support from favorable Swiss Trade Balance figures. The report showed a substantial increase in January’s trade surplus. Furthermore, SNB increased its foreign exchange reserves for the second successive month in January. The Federal Statistical Office of Switzerland is set to release the Employment Level for the fourth quarter of 2023 on Friday.

• USD/CHF consolidates in a tight range above 0.8800 as the focus remains on FOMC minutes.
• The SNB may lead the rate-cut cycle as inflation has been under 2% consecutively for the last eight months.
• Uncertainty ahead of FOMC minutes brings some strength to the US Dollar Index.

The USD/CHF pair oscillates in a narrow range slightly above the round-level support of 0.8800 in the London session on Wednesday. The Swiss Franc asset struggles for a direction as investors await the release of the Federal Open Market Committee (FOMC) minutes, which are scheduled at 19:00 GMT.

The FOMC minutes for the January policy meeting will provide more insights about the timing of long-awaited rate cuts. More clarity of rate-cut timing would improve the appeal for risk-sensitive assets.

Meanwhile, the US Dollar Index (DXY) has delivered a solid recovery move after refreshing its weekly low near 103.80. 10-year US Treasury yields that determine market expectations for interest rates have rebounded to 4.28%.

The Swiss Franc is broadly downbeat as the Swiss National Bank (SNB) appears to lead the rate-cut cycle due to easing price pressures. The annual inflation rate in the Swiss economy has remained below 2% for the last eight months, indicating the achievement of price stability.

USD/CHF trades sideways in a narrow range of 0.8795-0.8838 on an hourly scale. A sideways trend indicates a volatility contraction, followed by a decisive move in either direction. The 50-period Exponential Moving Average (EMA) near 0.8815 remains sticky to the Swiss Franc asset, indicating indecisiveness among market participants.

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, which indicates that investors await a fresh economic trigger.

Fresh upside would emerge if the asset breaks above the three-month high of around 0.8886, which would unlock upside towards the September 20 low at 0.8932 and the November 8 low at 0.8976.

On the contrary, a breakdown below February 15 low at 0.8783 would expose the asset to February 13 low at 0.8746, followed by the round-level support of 0.8700.

USD/CHF hourly chart

• USD/CHF extends losses towards the vicinity of 0.8800 amid a subdued US Dollar.
• The US Fed is expected to uphold elevated policy rates to tackle persistent inflation.
• Swiss Franc gained support from favorable Swiss Trade Balance figures on Tuesday.

USD/CHF moves downward for the second consecutive day, trading lower near 0.8800 during the Asian session on Wednesday. The weakening of the USD/CHF pair can be attributed to a softer US Dollar (USD), which is influenced by subdued US Treasury yields. This downturn may reflect market sentiment regarding potential rate cuts by the Federal Reserve (Fed) in upcoming meetings.

However, the US Federal Reserve is expected to maintain higher policy rates for an extended period to address persistent inflation concerns, particularly in light of recent robust consumer and producer prices data from the United States (US).

Based on the CME FedWatch Tool, the probability of a Fed rate cut has notably decreased to 8.5% for March and 30.7% for May. Instead, market expectations are now leaning towards the commencement of easing in June, with a likelihood of 54.3%.

The US Dollar Index (DXY) continues to decline, nearing 103.90, while the yields on US Treasury bonds, specifically the 2-year and 10-year, stand at 4.59% and 4.26%, respectively, at the time of writing. Traders are eagerly anticipating the release of the Federal Open Market Committee (FOMC) Minutes later in the North American session to glean further insights into the Federal Reserve's stance on interest rates.

On Tuesday, the Swiss Franc (CHF) received upward support from favorable Swiss Trade Balance figures. The report indicated a trade surplus of 4,738 million in January, surpassing December's figure of 1,271 million. Additionally, the Federal Statistical Office of Switzerland is set to unveil the Employment Level for the fourth quarter of 2023 on Friday.

• USD/CHF snaps its recent gains on a weaker US Dollar on Tuesday.
• Swiss Trade Balance came in at 4,738 million in January against December’s figure of 1,271 million.
• The US Fed is expected to avoid rate cuts in March and May on persistent consumer and producer prices.

USD/CHF breaks the two days of advances as the risk sentiment improves after the positive Swiss Trade Balance figures reported on Tuesday. The report showed a trade surplus of 4,738 million in January, which is higher than December’s figure of 1,271 million. The USD/CHF pair edges lower to near 0.8810 during the European session on Tuesday.

Moreover, Swiss Exports (MoM) improved to 22,804 million in January from the previous export figure of 18,788. While Imports (MoM) also rose to 18,067 million from the previous figure of 17,517 million. Furthermore, the Employment Level for the fourth quarter will be released on Friday.

Additionally, the weaker US Dollar (USD) is contributing to the downward pressure for the USD/CHF pair, which could be attributed to the decline in the US Treasury yields. However, the Greenback attempted to halt its losing streak on the risk aversion sentiment due to the fading possibility of interest rate cuts by the Federal Reserve at upcoming meetings in March and May.

The US Dollar Index (DXY) extends its losing streak for the fifth successive session trading lower around 104.10 with 2-year and 10-year yields on US bond coupons standing at 4.61% and 4.27%, respectively, by the press time.

Last week’s data showed that consumer and producer prices remain higher in the United States (US), which could possibly prevent the Federal Reserve from loosening the policy tightening sooner. Moreover, ANZ expects that the Federal Reserve (Fed) will initiate rate cuts starting from July 2024.

According to the CME FedWatch Tool, there is a 53% possibility of a 25 basis points rate cut by the US Fed in the June meeting. Traders will likely observe the Federal Open Market Committee’s (FOMC) minutes for the January meeting scheduled for Wednesday.

• USD/CHF trades in a narrow range, slightly above 0.8800, as US markets will remain closed on Monday.
• The week, the USD Index will be guided by the release of FOMC minutes.
• The SNB may commence the rate-cut cycle sooner amid easing price pressures.

The USD/CHF pair is struck in a tight range around 0.8800 in the London session on Monday. The Swiss Franc asset struggles for a direction as US markets will remain closed on Monday because of Presidents’ Day. Therefore, lower trading activity is anticipated.

The US Dollar Index (DXY) has discovered an intermediate support near 104.20 after declining for three trading sessions in a row. The USD Index fails to find a cushion despite investors seeing the Federal Reserve (Fed) keeping interest rates unchanged in the range of 5.25-5.50% till the June meeting due to persistent inflationary pressures.

This week, the Federal Open Market Committee (FOMC) minutes for the January policy meeting will guide the US Dollar. The FOMC minutes will provide a fresh outlook on interest rates.

Meanwhile, the Swiss franc is expected to face pressure in the longer term as investors see the Swiss National Bank (SNB) leading the rate cut cycle due to a sharp slowdown in the consumer price inflation data. Price pressures in the Swiss economy have remained below the 2% target, allowing the SNB to start reducing interest rates after holding them higher for longer.

USD/CHF trades sideways in a narrow range of 0.8795-0.8838 on an hourly scale. A sideways trend indicates a volatility contraction, followed by a decisive move in either direction. The 200-period Exponential Moving Average (EMA) near 0.8786 continues to support the US Dollar bulls.

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, which indicates indecisiveness among market participants.

Fresh upside would emerge if the asset breaks above the three-month high of around 0.8886, which would unlock upside towards the September 20 low at 0.8932 and the November 8 low at 0.8976.

On the contrary, a breakdown below February 15 low at 0.8783 would expose the asset to February 13 low at 0.8746, followed by the round-level support of 0.8700.

USD/CHF hourly chart

• USD/CHF gains ground amid stronger US Dollar ahead of US PMI data.
• The Greenback improves as risk-off mood prevails despite weaker US Retail Sales.
• Scotiabank expects the SNB to reduce interest rates during 2024.

USD/CHF recovers its recent losses on a stronger US Dollar (USD), which could be attributed to the risk-off sentiment. Additionally, improved US Treasury yields are supporting the Greenback to hold ground, which in turn, underpins the USD/CHF pair. The pair edges higher to around 0.8810 during the European session on Friday.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against the six other major currencies, edges higher to near 104.30. 2-year and 10-year yields on US bond coupons stand higher at 4.60% and 4.26%, respectively, by the press time. Furthermore, investors await the Producer Price Index (PPI) data and Michigan Consumer Sentiment Index scheduled to be released later in the North American session on Friday.

On Thursday, the mixed economic data from the United States put downward pressure on the Greenback, which in turn, undermined the USD/CHF pair. US Retail Sales (MoM) reported a decline in January against the expected decline. While Retail Sales Control Group decreased against the December’s increase.

According to the Scotiabank, Swiss Franc (CHF) may underperform moderately in 2024. Economists at Scotiabank expect some easing in the Swiss National Bank’s (SNB) interest rates trajectory. The market may witness a modest correction in the CHF’s somewhat overvalued status.

On Friday, Swiss Statistics released Industrial Production (YoY) report for the fourth quarter of 2023. The data showed a decline of 0.4% in the production of factories and manufacturing. These figures along with slowed Swiss consumer prices could have contributed to downward pressure on the Swiss Franc.

• USD/CHF loses ground as US Dollar declines on US yields.
• The risk appetite is improved on mild remarks from the Fed officials.
• The Swiss Franc faced pressure as Swiss inflation slowed in January.

USD/CHF maintains its downward trajectory, trading lower around 0.8850 during Thursday's Asian session. The US Dollar (USD) faces depreciation against the Swiss Franc (CHF) as US Treasury yields decline, driven by improved risk appetite. At the time of writing, the 2-year and 10-year US yields stand at 4.56% and 4.23%, respectively.

Traders assess the Federal Reserve's monetary policy outlook in light of robust inflation data and recent statements from Fed officials. Chicago Fed President Austan Goolsbee's remarks on Wednesday aimed to alleviate market concerns by suggesting that higher-than-expected consumer prices don't necessarily preclude the Federal Reserve from considering interest rate cuts in 2024.

Federal Reserve Vice Chair for Supervision Michael Barr attracted attention by reiterating the Federal Reserve's confidence, along with its core Federal Open Market Committee, in the trajectory of US inflation towards the Fed's 2% target.

On the other side, the Swiss Franc has faced downward pressure as consumer prices in the Swiss economy have notably slowed. In January, the monthly Consumer Price Index (CPI) increased by 0.2%, compared to expectations of a 0.6% growth, following a stagnant reading in December. Annual inflation significantly decelerated to 1.3%, below both expectations and the previous reading of 1.7%.

The Federal Statistical Office of Switzerland is scheduled to release Producer and Import Prices data on Thursday, with expectations leaning towards an improvement in January. Additionally, market attention will turn to Retail Sales data and Initial Jobless Claims from the United States.

• USD/CHF delivers a mild correction from an 11-week high of 0.8880 as the USD Index turns subdued.
• The broader appeal for the US Dollar remains upbeat as investors see the first rate cut by the Fed in July.
• The SNB may rollback its restrictive interest rate stance sooner amid easing price pressures.

The USD/CHF pair delivers a moderate corrective move from an 11-week high of 0.8880 in the late Asian session on Wednesday. The corrective move seems profit-booking after a strong rally inspired by January's sticky United States inflation data. Therefore, more upside in the Swiss Franc asset is anticipated.

S&P500 futures have posted nominal gains in the Asian session, portraying some ease in the risk-aversion theme. The broader market sentiment is negative as stubborn US Consumer Price Index (CPI) data has pushed back expectations of rate cuts by the Federal Reserve (Fed) in the March monetary policy meeting. The US Dollar Index (DXY) oscillates in a tight range near 104.80 after a vertical upside move.

As per the CME Fedwatch tool, traders see a 38% chance for a rate cut of 25 basis points (bps), which have come down from 50% after the release of the persistent inflation report.

The core CPI data that excludes volatile food and oil prices rose at a steady pace of 3.9%, while investors forecasted a decline to 3.9%. Fed policymakers generally consider the core inflation data for the preparation of remarks for monetary policy. Stubborn core inflation data would strengthen the argument supporting keeping interest rates restricted for longer.

Meanwhile, the Swiss Franc has come under pressure as price pressures in the Swiss economy have decelerated significantly. In January, the monthly CPI grew by 0.2% after remaining stagnant in December, which investors anticipated a growth of 0.6%. Annual inflation decelerated significantly to 1.3% from expectations and a prior reading of 1.7%. This would allow the Swiss National Bank (SNB) to unwind its restrictive monetary policy stance.

• US CPI inflation came in higher than expected, knocking down rate-cut hopes.
• Swiss CPI inflation slumped, putting the CHF on the defensive.
• US Retail Sales still in the barrel for Thursday.

The USD/CHF tipped into a fresh eight-week high above 0.8700 after a hot US Consumer Price Index (CPI) print sent markets piling back into the safe haven US Dollar (USD), while the Swiss Franc (CHF) got pummeled after Swiss CPI inflation came in below expectations.

Swiss CPI inflation came in at 0.2% MoM in January, missing the forecast 0.6% and seeing only a thin rebound from the previous month’s 0.0% print. YoY Swiss CPI inflation printed at 1.3% versus the forecast steady print at 1.7%, sending the Swiss Franc lower and putting the USD/CHF on pace to close higher for the fifth of the last six trading weeks.

US CPI inflation came in hotter than markets anticipated, with MoM headline CPI printing at 0.3% in January versus the forecast 0.2%. December’s print saw a revision to 0.2% from 0.3%. Core annualized CPI held steady at 3.9% compared to the forecast 3.7%, and headline annualized US CPI printed at 3.1%, down from the previous 3.4% but missing the market’s forecast 2.9%.

With US inflation proving stickier than investors were hoping, market bets of a rate cut from the Federal Reserve (Fed) got pushe dout even further on Tuesday. According to the CME FedWatch Tool, money markets are now pricing in a first rate trim in June. Markets have been pushed down from six to five total rate cuts in 2024.

US Retail Sales are still slated for release on Thursday, alongside US Initial Jobless Claims. US Retail Sales are expected to tick down -0.1% in January versus the previous month’s 0.6%, and Initial Jobless Claims are expected to come in at 220K for the week ended February 9 compared to the previous week’s 218K.

USD/CHF technical outlook

Tuesday’s USD/CHF rally has the pair pulling even further away from near-term medians with the 200-hour Simple Moving Average (SMA) near 0.8710. The pair is testing into eight-week highs near the 0.8900 handle, and the USD/CHF climbed nearly 1.4% bottom-to-top on the day.

Daily candlesticks have pierced the 200-day SMA near 0.8843, and the pair has closed bullish for six of the last eight consecutive trading days. The USD/CHF has gained around 6.5% from December’s low of 0.8332.

USD/CHF hourly chart

USD/CHF daily chart

The Swiss Franc (CHF) has been one of the outperformers in 2023, gaining by nearly 10% vs. the US Dollar (USD). Economists at OCBC Bank analyze USD/CHF outlook.

Forecast trajectory is largely flat for USD/CHF

• USD/CHF soars to 0.8800, prompted by soft Swiss inflation figures.
• Swiss annual inflation data softened to 1.3% from the expectations and the former reading of 1.7%.
• The US Dollar falls from the day’s high while investors remain cautious ahead of US Inflation data.

The USD/CHF pair witnesses a stellar buying interest and reaches to the round-level resistance of 0.8800 in the European session on Tuesday after a soft Swiss Consumer Price Index (CPI) report for January.

The monthly CPI grew at a slower pace of 0.2% against the consensus of 0.6%. In December, price pressures remained stagnant. Annual inflation decelerated significantly to 1.3% from expectations and the prior reading of 1.7%. The Swiss economy is consistently operating below 2% inflation, which would allow the Swiss National Bank (SNB) to unwind its restrictive monetary policy stance.

S&P500 futures have posted decent losses in the London session, portraying caution among market participants ahead of the United States inflation data for January, which will be published at 13:30 GMT. Meanwhile, the US Dollar Index (DXY) has surrendered all of its intraday gains.

According to the expectations, the headline CPI grew at a steady pace of 0.2% on a monthly basis. In a similar timeframe, the core CPI that excludes volatile food and oil prices rose steadily by 0.3%. The annual headline inflation is anticipated to decelerate to 2.9% from 3.4% in December, while core CPI rose at a slightly slower pace of 3.7% against 3.9%.

Decelerating price pressures would allow the Federal Reserve (Fed) to consider rate cuts in the May policy meeting as anticipated by investors. However, Fed policymakers have been reiterating that they need progress in declining inflation for months before reducing interest rates.

• USD/CHF inches lower as the US Dollar faces a challenge on downbeat US yields.
• Fed’s Lorie Logan emphasized the importance of obtaining additional evidence to confirm the progress in inflation.
• Swiss CPI (YoY) is expected to ease at 1.6% against the previous reading of 1.7%.

USD/CHF retreats to around 0.8730 during the early European hours on Monday. This decline in the pair is attributed to the weakening of the US Dollar (USD). Despite hawkish remarks from Federal Reserve (Fed) officials, the US Dollar faces downward pressure amid prevailing risk-on sentiment in the market.

On Friday, Dallas Federal Reserve (Fed) Bank President Lorie Logan stated that there is currently no immediate necessity to lower interest rates. Logan emphasized the importance of obtaining additional evidence to confirm the progress sustainability in inflation.

The US Dollar encounters headwinds as US Treasury yields decline. The US Dollar Index (DXY) slides to around 104.00, with 2-year and 10-year US yields hovering at 4.47% and 4.16%, respectively.

Market attention is focused on the upcoming release of Consumer Price Index (CPI) data on Tuesday. Analysts are anticipating a decrease in January's CPI (Year-on-Year) to 3.0%, down from December's 3.4%. Additionally, the monthly CPI data is expected to ease to 0.2% from the previous reading of 0.3%.

In January, the non-seasonally adjusted Swiss Unemployment Rate (Year-on-Year) increased, while the seasonally adjusted Unemployment Rate (Month-on-Month) remained stable. The Swiss National Bank (SNB) opted to maintain its key interest rate at 1.75%, marking the conclusion of its recent tightening cycle.

Market participants are eagerly awaiting the release of Swiss Consumer Price Index (CPI) data for January, scheduled for Tuesday. Projections suggest that headline Swiss inflation could grow by 1.6%, lower than the previous growth of 1.7%. Analysts widely anticipate that the SNB might initiate its first rate cut in September 2024.

• USD/CHF inches higher on geopolitical tension in the Middle East.
• The US Dollar receives upward support on market caution.
• Market participants await the Swiss CPI data scheduled for Tuesday.

USD/CHF retraces its recent losses as the US Dollar (USD) strengthens amid heightened geopolitical tensions in the Middle East, edging higher to around 0.8740 during Friday's Asian market session. Israeli airstrikes targeted the southern border city of Rafah on Thursday.

However, the United States (US) has advised Israel against launching a military offensive into Rafah without proper planning, warning that such action could result in a "disaster." The White House emphasized that it would not support any major operations in Rafah without careful consideration for the refugees residing there. Meanwhile, a Hamas delegation arrived in Cairo on Thursday for ceasefire discussions with mediators from Egypt and Qatar.

The US Dollar Index (DXY) is poised to sustain its recent uptrend for the second consecutive day, hovering around 104.20 as of the latest update. Although the decline in US bond yields may be exerting some downward pressure on the Greenback, its resilience persists. This is primarily attributed to hawkish remarks from US Federal Reserve (Fed) officials, which continue to lend support to the currency.

Federal Reserve Richmond President Thomas Barkin reaffirmed on Thursday that policymakers have the leeway to exercise patience regarding the timing of rate adjustments. He cited a robust labor market and ongoing disinflation influencing this stance. Additionally, Federal Reserve Chair Jerome Powell dismissed the possibility of a rate cut in March during a press conference held after the interest rate decision on January 31.

The non-seasonally adjusted Swiss Unemployment (YoY) Rate rose to 2.5% in January, surpassing the previous figure of 2.3%. Conversely, the seasonally adjusted Unemployment Rate (MoM) held steady at 2.2%, meeting expectations. Market participants eagerly await the release of Swiss Consumer Price Index (CPI) data scheduled for Tuesday, which will be closely monitored for further insights into the economic landscape.

• USD/CHF depreciates as US Treasury yields lose ground on risk appetite.
• Risk-on mood improves despite the US Fed’s hawkish stance on interest rate trajectory.
• The appreciation of the CHF curbs Swiss inflation by lowering the cost of imported goods and services.

USD/CHF attempts to recover its recent gains registered in the previous session. The USD/CHF pair edges lower to near 0.8730 during the European hours on Thursday. The improved risk appetite weakened the US Dollar (USD) against the Swiss Franc (CHF). Additionally, the subdued US bond yields are contributing downward pressure to undermining the Greenback.

However, the US Dollar Index (DXY) hovers around 104.10 with the 2-year and 10-year yields on US bond coupons standing at 4.42% and 4.11%, respectively, by the press time. Market sentiment seems to avoid the hawkish stance taken by the US Federal Reserve (Fed) post-January interest rate decision.

The Federal Reserve reiterated its commitment to maintaining elevated interest rates for an extended period. Federal Reserve Chair Jerome Powell dismissed the notion of a rate cut in March, emphasizing the importance of monitoring inflation's sustainable return to the 2% target.

In January, the non-seasonally adjusted Swiss Unemployment Rate (year-on-year) rose to 2.5%, up from the previous figure of 2.3%. Meanwhile, the seasonally adjusted Unemployment Rate (month-on-month) remained unchanged at 2.2%, in line with expectations.

Swiss National Bank (SNB) decided to maintain its key interest rate at 1.75%, signaling the end of its recent tightening phase. The strengthened Swiss Franc has played a role in curbing inflation by lowering the expenses associated with imported goods and services. Forecasts for the current year suggest that inflation is projected to remain below the 2.0% threshold. Consequently, market analysts widely anticipate that the SNB could introduce its first rate cut in September 2024.

• USD/CHF moves above towards the psychological level of 0.8700.
• US Dollar registers losses due to weaker US bond yields.
• Swiss Unemployment Rate (YoY) increased by 2.5% in January against the 2.3% prior.

USD/CHF recovers its losses amid a subdued US Dollar, edging higher to near 0.8700 during the early European hours on Wednesday. US Dollar (USD) faces a challenge due to lower yields on US Treasury bonds, consequently, undermining the USD/CHF pair.

US Dollar Index (DXY) continues to lose ground, inching lower to near 104.00 with the 2-year and 10-year yields on US bond notes standing at 4.39% and 4.02%, respectively, by the press time. Nevertheless, the bearish momentum of the Greenback might have been limited by the hawkish remarks from US Federal Reserve (Fed) Chair Jerome Powell. Powell alleviated market expectations of a rate cut in March and underscored the importance of closely monitoring inflation as it approaches the Fed's 2% core target.

Furthermore, Fed Bank of Cleveland President Loretta Mester remarked on Tuesday that the US central bank might consider the possibility of reducing interest rates later in the year. Meanwhile, Fed Bank of Philadelphia President Patrick Harker voiced his support for the Fed's decision to keep interest rates unchanged last week, citing an outlook suggesting ongoing declines in inflation.

Fed members Adriana D. Kugler and Thomas I. Barkin are slated to deliver speeches on Wednesday, with market participants anticipated to closely scrutinize their remarks for additional insights into the Federal Reserve's stance on monetary policy.

The non-seasonally adjusted Swiss Unemployment Rate (YoY) increased by 2.5% in January against the 2.3% prior. While seasonally adjusted Unemployment Rate (MoM) is unchanged at 2.2% as expected. Foreign Currency Reserves increased to 662 billion in January from the previous figure of 654 billion.

Projections for the current year suggest that inflation is anticipated to average below the 2.0% threshold. In light of these considerations, there is a consensus among analysts that the Swiss National Bank (SNB) may embark on its first rate cut in September 2024.

• USD/CHF takes a breather after two days of a winning streak.
• Swiss Franc could receive support from the improved 10-year Swiss bond yield.
• US Dollar made profits on the Fed Powell’s rejection of rate cut in March amid upbeat economic data.

USD/CHF trades lower after registering gains for consecutive two days, edging lower to near 0.8700 during the Asian session on Tuesday. The Swiss Franc (CHF) may be receiving support from the improved 10-year Swiss bond yield, standing at 0.93% by the press time. This movement in the bond yield could be influenced by global market sentiment after the recent comments from Federal Reserve Chair Jerome Powell, who indicated that a rate cut in March is premature.

In its final meeting of 2023, the Swiss National Bank (SNB) opted to keep its key interest rate unchanged at 1.75%, marking the conclusion of its recent tightening cycle. Consumer prices remained steady on a monthly basis, while the core rate experienced a slight increase. Projections for the current year indicate that inflation is expected to average below the 2.0% threshold. Given these considerations, there is a consensus expectation among analysts that the SNB might initiate its first rate cut in September 2024.

The US Dollar Index (DXY) takes a breather after registering gains in the previous two sessions. The DXY trades slightly lower around 104.30, which could be attributed to the weaker US Treasury yields. The 2-year and 10-year yields on US bonds stand at 4.43% and 4.12%, respectively, at the time of writing.

In January, the US ISM Services Purchasing Managers' Index (PMI) posted a reading of 53.4, surpassing both the anticipated figure of 52.0 and the prior month's 50.5. Furthermore, the ISM Services Employment Index rose to 50.5 from the previous reading of 43.8.

Federal Reserve Chairman Jerome Powell underscored the importance of vigilantly observing inflation's sustained movement toward the 2% core target. This stance had the effect of strengthening the US Dollar, providing support to the USD/CHF pair.

• USD/CHF continues to move on an upward trajectory after the blockbuster US Nonfarm Payrolls data.
• Fed’s Powell restated that initiating rate cuts in the March meeting may be premature.
• The Swiss National Bank is expected to initiate a rate cut in September 2024.

USD/CHF improved to 0.8680 during the Asian session on Monday, extending gains for the second straight session. The US Dollar (USD) received support as the market sentiment indicated that the Federal Reserve is unlikely to cut interest rates at March's meeting after the solid US employment figures released on Friday.

On Friday, the US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls added 353K jobs in January, surpassing the previous reading of 333K and exceeding the market consensus of 180K. Average Hourly Earnings (MoM) came in at 0.6% for January, exceeding the expected 0.3% and 0.4% reading from December. The Unemployment Rate remained unchanged at 3.7% in January against the market consensus of 3.8%.

Jerome Powell, the Chair of the US Federal Reserve (Fed), has restated that initiating rate cuts in the March meeting may be premature. He stressed the importance of approaching the timing of rate cuts cautiously, considering the current strength of the economy. Moreover, Austan Goolsbee, the President of the Chicago Federal Reserve (Fed) Bank, expressed on Friday that he does not view the robust US job growth in January as a reason to delay interest rate cuts. Instead, he sees it as reassurance that the labor market is resilient and not on the verge of weakening.

The most recent data on the Swiss Manufacturing Purchasing Managers Index (PMI) indicated a marginal improvement in production growth in Switzerland, falling short of market expectations. Despite a surge in Gross Domestic Product surpassing market consensus, there has been a dip in Swiss Real Retail Sales and Consumer Demand. As a result, there is a prevailing anticipation in the market that the Swiss National Bank (SNB) is likely to implement its inaugural rate cut in September 2024, in line with consensus expectations.

• USD/CHF extends its losses as the US Dollar loses ground on subdued US yields.
• Swiss Manufacturing PMI improved to 43.1 but fell short of the expected 44.5.
• US Treasury yields face challenges as the regional bank New York Community Bancorp is stressed in its commercial real estate portfolio.

USD/CHF loses ground for the third consecutive session, edging lower to near 0.8560 during the European trading hours on Friday. The downbeat labor data from the United States (US) weakened the US Dollar (USD), which in turn, acted as a headwind for the USD/CHF pair.

The Swiss Manufacturing Purchasing Managers Index (PMI) released by the Trade Association for Purchasing and Supply Management showed that production growth in Switzerland has slightly improved but failed to meet the market expectations. The index improved to 43.1 in January from the previous reading of 43.0, falling short of the expected 44.5 reading.

Recent economic events indicated a decline in Swiss Real Retail Sales and Consumer Demand, contrasting with a rise in Gross Domestic Product that exceeded market consensus. Looking ahead, projections for this year suggest that inflation will average below the 2% threshold. The consensus expectation is for the Swiss National Bank (SNB) to implement its first rate cut in September 2024.

The subdued US Treasury yields are adding pressure on the US Dollar (USD). The downward pressure on US Treasury yields followed reports from regional bank New York Community Bancorp, revealing increased stress in its commercial real estate portfolio.

Furthermore, the US Dollar (USD) faced downward pressure following the release of mixed economic data from the United States (US) on Thursday. Initial Jobless Claims for the week ending on January 26 increased to 224K, surpassing both the previous rise of 215K and the expected figure of 212K.

However, the ISM Manufacturing PMI improved, climbing to 49.1 from the prior reading of 47.1, surpassing the anticipated figure of 47.0 in January. More labor data, including US Average Hourly Earnings and Nonfarm Payrolls (NFP), is scheduled for release on Friday.