CFD Trading Rate US Dollar vs Swiss Franc (USDCHF)

• USD/CHF appreciated as the US Dollar improved after stronger US ISM data.
• Swiss Franc receives downward pressure after weaker Real Retail Sales.
• Swiss Real Retail Sales declined by 0.2% YoY in February, against the expected rise of 0.4%.

USD/CHF extends gains for the second consecutive day, advancing to near 0.9080 during the early European hours on Tuesday. The US Dollar (USD) received a boost as US Treasury bond yields surged following positive ISM Manufacturing PMI data from the United States (US), thereby supporting the USD/CHF pair.

The US Dollar Index (DXY) continues its winning streak for the fifth successive session, trading around 105.10 at the time of writing. This positive trend is attributed to traders lowering their expectations for a quarter-point interest rate cut by the Federal Reserve in its June meeting.

However, Federal Reserve Chairman Jerome Powell indicated on Friday that recent US inflation data aligns with the anticipated path, reinforcing the Fed's stance on interest rate adjustments for the year.

On the other side, Real Retail Sales (YoY) from Switzerland declined by 0.2% in February, against the expected increase of 0.4% and the previous increase of 0.3%. This lower figure has contributed to downward pressure on Swiss Franc (CHF).

The Swiss National Bank’s (SNB) statement highlighted that the easing of monetary policy was feasible due to the effectiveness of the inflation-fighting efforts over the past two and a half years.

Moreover, ING analysts anticipate two additional rate cuts from the SNB in the year 2024, barring any unexpected developments in the global economic landscape that could rapidly escalate inflationary pressures once more.

• USD/CHF consolidates in a narrow trading range near 0.9015 on the softer USD on Monday.  
• The US Core PCE figures, rose 2.8% YoY and 0.3% MoM in February, matching the market estimation.
• ING analysts expect two more rate cuts this year from the SNB, unless there is a surprise that causes inflation to grow rapidly again.

The USD/CHF pair trades with mild negative bias around 0.9015 during the early European session on Monday. The dovish comments from Federal Reserve (Fed) Chairman Jerome Powell on Friday weigh on the US Dollar (USD) and cap the upside of the USD/CHF pair. The attention is shifted to the US March ISM Manufacturing Purchasing Managers Index (PMI), due later on Monday. The market is likely to stay subdued amid the Easter Monday bank holiday in Switzerland, 

The recent inflation data was in line with market expectations in February, potentially keeping the Fed on hold before it can begin cutting interest rates this year. Market pricing is in line with Fed projections for three rate cuts, according to the CME Group’s FedWatch Tool. On Friday, the US Bureau of Economic Analysis reported that the Personal Consumption Expenditures Price Index (PCE) rose 2.5% YoY in February, in line with the market consensus. Meanwhile, the monthly PCE figure increased by 0.4% MoM in the same month, softer than expected. The Fed’s preferred inflation measure, Core PCE, rose 2.8% YoY and 0.3% MoM in February, matching the market estimation. 

On the Swiss front, the Swiss National Bank (SNB) decided to cut the benchmark interest rate by 25 basis points (bps) to 1.5% on March 21. The SNB statement noted that the easing of monetary policy has been made possible because the battle against inflation over the past two and a half years has been effective. ING analysts expect two more rate cuts this year from the SNB, unless there is a surprise in the international economic environment that causes inflationary pressures to grow rapidly again.

The Swiss Consumer Price Index will be due on Thursday, which is expected to show an increase of 1.4% in March. If the Swiss CPI inflation data came in softer than expected, this could exert some selling pressure on the Swiss Franc (CHF). On Friday, investors will turn their attention to the US employment data, including the Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings for March. 

• USD/CHF holds the positive ground around 0.9025 on the firmer US Dollar. 
• The high-for-longer US rate narrative might boost the Greenback against the CHF. 
• SNB’s Schlegel said the SNB will monitor the FX rate closely and intervene if necessary. 

The USD/CHF pair snaps the two-day losing streak near 0.9025 on Friday during the Asian session. The hawkish comments from the US Federal Reserve (Fed) and strong US economic data boost the US Dollar (USD) and support USD/CHF. However, the upside of the pair might be limited amid the possibility that the Swiss National Bank (SNB) could intervene in the foreign exchange market. 

The Fed governor Christopher Waller said on Wednesday that the US central bank was in no rush to cut interest rates as elevated inflation indicated that the current rates needed more time to work. Meanwhile, Fed Governor Lisa Cook stated on Monday that the path of disinflation has been bumpy, but a cautious approach to further policy shifts can ensure that inflation will return sustainably to the 2% target. The high-for-longer US rate narrative might lift the Greenback and create a tailwind for the pair in the near term. 

On the other hand, the Swiss National Bank (SNB) Vice President Martin Schlegel said on Wednesday that the Swiss central bank will monitor the exchange rate closely and intervene in the foreign exchange market as necessary, even though it has no target for the Swiss Franc (CHF) exchange rate. Last week, the SNB surprised the market by cutting its benchmark interest rate for the first time in nine years, which triggered the sell-off in the CHF in previous sessions. The speculation of SNB’s intervention might cap the downside of the CHF against the USD.  

Additionally, the escalating geopolitical tensions in the Middle East might benefit safe-haven currencies like the Swiss Franc. The Palestinian Red Crescent said that Israeli forces besieged two more Gaza hospitals on Sunday, pinning down medical teams under heavy gunfire.

Later on Friday, the US Core Personal Consumption Expenditures (PCE) Price Index will be due. The Fed’s preferred inflation gauge is estimated to remain stable at 2.8% YoY. The market is likely to be mute in light trading on Good Friday.

• USD/CHF gains ground on risk-off sentiment ahead of US data.
• US GDP Annualized is expected to remain consistent at 3.2% in the fourth quarter of 2023.
• KOF Leading Indicator is expected to show a slight uptick to 102.0 in March, compared to the previous reading of 101.6.

USD/CHF moves higher to near 0.9060 during the early European session on Thursday. The US Dollar (USD) receives upward support against the Swiss Franc (CHF), which could be attributed to the risk aversion ahead of the key economic figures from the United States (US).

Traders adopt a cautious stance ahead of the releases of Gross Domestic Product Annualized and Initial Jobless Claims data scheduled to be released on Thursday. Furthermore, Personal Consumption Expenditures is set to be revealed on Friday.

US Dollar Index (DXY) rises to near 104.50, with higher 2-year and 10-year yields on US coupon bonds standing at 4.61% and 4.20%, respectively, by the press time. However, conflicting views among members of the Federal Open Market Committee (FOMC) regarding monetary policy easing are adding to market uncertainty.

Federal Reserve Board Governor Christopher Waller continues to advocate for a cautious approach toward rate cuts, citing persistent inflation data. Atlanta Fed President Raphael Bostic shares this sentiment, foreseeing only one rate cut this year and warning against premature reductions that could worsen economic disruptions.

In other news, the ZEW Survey – Expectations rose by 1.3 points in March to reach 11.5, the highest level since October 2021. This increase was supported by the Swiss National Bank's decision to lower its interest rate by 25 basis points to 1.5%. Following the announcement, the Swiss Franc (CHF) weakened further year-to-date, as the SNB's move is likely to undermine the currency, being the first G10 central bank to implement such a cut.

Looking ahead, the Swiss Leading Indicator, to be released on Thursday by the KOF Swiss Economic Institute, is expected to show a slight uptick to 102.0 in March, compared to the previous reading of 101.6.

• USD/CHF appreciates due to risk aversion ahead of key data from the United States.
• The decline in the US Treasury yields could limit the advance of the US Dollar.
• Swiss Franc has depreciated as a result of contrasting monetary policies between the SNB and the Fed.

USD/CHF moves in the positive direction, driven by a stronger US Dollar (USD), possibly influenced by a risk-off sentiment. This sentiment is fueled by anticipation surrounding the upcoming release of the US Gross Domestic Product Annualized on Thursday and Personal Consumption Expenditures (PCE) scheduled for Friday. As a result, the USD/CHF pair rises to a four-month high near 0.9050 during the early European hours on Wednesday.

However, the decline in US Treasury yields may be attributed to expectations surrounding the US Federal Reserve (Fed) considering potential rate cuts in June. This sentiment could potentially limit the advances of the US Dollar, subsequently putting pressure on the USD/CHF pair.

The Swiss Franc (CHF) has depreciated due to differing monetary policies between the Swiss National Bank (SNB) and the Federal Reserve. In its March meeting, the SNB surprised markets by lowering its benchmark interest rate by 25 basis points to 1.5%, marking the first rate cut among major central banks since the onset of global disinflation in 2023. After the announcement, the CHF extended its year-to-date weakness. Being the first G10 central bank to cut is likely to undermine the currency.

The Swiss Franc could have gained strength due to risk aversion triggered by the European Union's (EU) launch of investigations into major tech firms such as Apple, Google, and Meta on Monday. Additionally, escalating geopolitical tensions between Ukraine and Russia may lead investors to seek refuge in safe-haven currencies like the CHF.

• USD/CHF rebounds to 0.9000 on broader weakness in the Swiss Franc due to SNB’s surprise rate-cut decision.
• Fed policymakers remain confident about easing price pressures.
• Market participants await the US core PCE inflation data for fresh guidance.

The USD/CHF pair recaptures the psychological resistance of 0.9000 in the European session. The Swiss Franc asset rebounds despite the US Dollar easing after refreshing its monthly high. Weak Swiss Franc due to the surprise rate cut decision by the Swiss National Bank (SNB) reinforces demand for the pair.

Last week, the SNB announced a rate cut by 25 basis points (bps) to 1.50%, while investors anticipated that interest rates would remain unchanged. The SNB became the first among central banks of developed nations to kick off the rate-cut cycle.

S&P 500 futures have posted decent gains in the London session, portraying an improvement in the risk appetite of the market participants. The US Dollar Index (DXY) falls to 104.10 as Federal Reserve (Fed) policymakers remain confident that the underlying inflation is easing despite price pressures remaining stubborn in January and February. 10-year US Treasury yields have dropped to 4.25% due to firm expectations that the Fed will start reducing interest rates from the June policy meeting.

Higher house rentals significantly drive the US inflation but policymakers are confident that inflation will come down to 2%. Chicago Federal Reserve Bank President Austan Goolsbee said on Monday, in an interview with Yahoo Finance, "So we're in an uncertain state but it doesn't feel to me like we've changed fundamentally the story that we're getting back to target," Austan Goolsbee predicted three rate cuts for this year in the March monetary policy.

This week, the next move in the US Dollar will be guided by the US core Personal Consumption Expenditure price index (PCE) for February, which will be published on Friday.

• USD/CHF faced challenges due to lower US Treasury yields on Tuesday.
• Fed’s member Raphael Bostic expressed his expectation for only one rate cut this year.
• Swiss Franc may cheer the risk aversion stemming from the EU’s investigations into major tech firms.

USD/CHF moves in the positive direction for the second consecutive day on Tuesday, advancing to near 0.9000 during the early European session. The US Dollar (USD) saw gains fueled by hawkish comments from US Federal Reserve (Fed) officials.

Fed members suggested that the Fed should postpone interest rate cuts, supporting the notion that interest rates should remain at their current elevated levels for a longer duration. This stance bolstered the US Dollar, as higher interest rates tend to attract more foreign capital inflows.

Atlanta Fed President Raphael Bostic expressed his expectation for only one rate cut this year, cautioning against premature rate reductions due to the potential for increased disruption. Conversely, Chicago Fed President Austan Goolsbee, aligning with the majority of the board, anticipates three cuts. However, Goolsbee underscores the need for additional evidence indicating a decline in inflation before advocating for rate cuts.

On the flip side, the Swiss Franc (CHF) may have garnered some strength due to risk aversion stemming from the European Union's (EU) initiation of investigations into major tech firms like Apple, Google, and Meta on Monday. Additionally, geopolitical tensions between Ukraine and Russia may prompt investors to seek refuge in safe-haven currencies such as the Swiss Franc (CHF).

In its March meeting held on Thursday, the Swiss National Bank (SNB) opted to cut interest rates by 25 basis points (bps) to 1.50%. This decision was driven by significant declines in both inflation and growth over the past year.

The SNB projects inflation to average 1.9% in 2024, although the current inflation rate stands notably lower at 1.2%. However, there was a substantial increase in the Consumer Price Index (CPI) in February, rising by 0.6% compared to the previous month's increase of 0.2%.

Looking ahead, the ZEW Survey Expectations for March and the SNB Quarterly Bulletin for the first quarter are scheduled for release on Wednesday. Additionally, Consumer Confidence data will be released from the United States.

• USD/CHF rises up and achieves the first price target for range breakout. 
• The pair is now pulling back and RSI is threatening to exit overbought increasing bearish pressure. 
• USD/CHF is in a solid uptrend so should continue higher to next target after the correction.
   

The USD/CHF is trading in the upper 0.8900s after breaking out of the top of a range it had been yo-yoing in since Valentine’s Day, and rallying higher. 

The pair has now risen up and met the conservative target for the breakout at 0.8984 and is pulling back. 

The technical method for establishing targets from range breakouts is by taking the 0.618 Fibonacci of the height of the range and extending it from the breakout point higher. 

US Dollar versus Swiss Franc: 4-hour chart

The next target is at 0.9052, the full height (1.000 ratio) of the range extrapolated higher. 

There is likely to be a correction before the next target is achieved, however, given the Relative Strength Index (RSI) is threatening to exit overbought territory on the current bar. Such an exit would provide a sell signal and reinforce the view that a correction is evolving. 

If the current 4-hour period ends bearishly the exit from overbought will be confirmed. This would increase the chances of a continuation of the pullback, potentially to a target at the midpoint of the breakout rally, situated at 0.8930. 

Beyond that, the pair is overall seen continuing the short-term uptrend that formed prior to the range. 

It would take a break back below 0.8729 to suggest a short-term trend reversal and the start of a deeper slide. 

The first target for such a move would be the 0.618 Fib. extrapolation of the height of the range at 0.8632, followed by the full extrapolation at 0.8577, which is also close to the 0.8551 January 31 lows, another key support level to the downside. 

• USD/CHF holds positive ground around 0.8990 in Friday’s early European session. 
• The Swiss National Bank (SNB) announced a surprise rate cut to its key interest rate to 1.5% on Thursday.
• US S&P Global Manufacturing PMI came in stronger than expected, climbing to 52.5 in March vs. 52.2 prior. 

The USD/CHF pair gains traction below the 0.9000 psychological barrier during the early European session on Friday. The Swiss Franc (CHF) has faced some selling pressure after the Swiss National Bank (SNB) cut its main interest rate by 25 basis points (bps) to 1.50% in a surprise move on Thursday. At the press time, USD/CHF is trading at 0.8990, adding 0.15% on the day. 

The Swiss central bank decided to cut interest rates from 1.75% to 1.50% on Thursday, marking the first central bank to declare victory over inflation. Following the monetary policy meeting, SNB Chairman Thomas Jordan said that the easing of monetary policy was possible because the fight against inflation has been effective. The move comes after Swiss inflation fell to 1.2% in February, which remained below the SNB's 0-2% target range. That being said, a surprise rate cut from the SNB drags the CHF lower and creates a tailwind for the USD/CHF pair. 

On the other hand, the US Federal Reserve (Fed) left its benchmark interest rate unchanged on Wednesday but retained its outlook for three rate cuts this year. Fed Chairman Jerome Powell stated that the upside surprises on US inflation data in January and February haven't changed the overall story that inflation is returning to its 2% target gradually on a somewhat bumpy road.

Data released on Thursday showed that the US S&P Global Manufacturing PMI came in stronger than expected, rising to 52.5 in March from 52.2 in February. Meanwhile, the Services PMI eased to 51.7 in March from 52.3 in February, weaker than the estimation of 52.0. Finally, the Composite PMI came in at 52.2 in March versus 52.5 prior.  

Investors await Federal Reserve (Fed) Chair Jerome Powell’s speech on Friday, which might offer some hints about the inflation and monetary policy outlook. Next week, the Swiss ZEW Survey for March and the SNB Quarterly Bulletin for the first quarter (Q1) of 2024 will be released, along with the US Gross Domestic Product Annualized (GDP) for Q4. 

• USD/CHF gains ground on SNB’s decision to reduce interest rates by 25 bps on Thursday.
• The Swiss National Bank (SNB) has opted to reduce interest rates in response to significant declines in both inflation and growth over the past year.
• Fed projects a higher long-term policy rate through December, increasing to 2.6% from the previous projection of 2.5%.

USD/CHF has rebounded from intraday losses and shifted into positive territory following the Swiss National Bank's (SNB) decision to cut interest rates by 25 basis points (bps) to 1.50% in its March meeting held on Thursday. As a result, the USD/CHF pair trades higher around 0.8960 during the European session.

SNB has reduced interest rates due to substantial declines in both inflation and growth over the last year. The Swiss National Bank (SNB) projects inflation to average 1.9% in 2024. Currently, the inflation rate is notably lower than this forecast, standing at 1.2%. However, there was a significant increase in the Consumer Price Index (CPI) in February, rising by 0.6% compared to the previous month's increase of 0.2%.

The Federal Reserve is now projecting a higher long-term policy rate through December, ticking up to 2.6% from 2.5%. However, despite the Fed's optimistic growth expectations, markets are seemingly shrugging off these projections, leading to a decline in the value of the US Dollar (USD).

The US Dollar Index (DXY) hovers around 103.30, mainly influenced by weaker US Treasury yields. Yields for the 2-year and 10-year bond coupons have fallen to 4.59% and 4.25%, respectively. This decline is attributed to the US Federal Reserve's (Fed) reaffirmation of expectations for three interest rate cuts this year.

Even though the Federal Open Market Committee (FOMC) projects stronger growth throughout 2024 and 2025 than initially anticipated, investor sentiment indicates expectations of additional easing measures in 2024.

• USD/CHF gains ground on the expectation of the Fed prolonging elevated policy rates.
• Bond markets face selling pressure as a result of the resilience observed in the US economy.
• Swiss Trade Balance revealed a surplus of 3662M, surpassing expectations of 3500M

USD/CHF climbs towards 0.8890 during the Asian hours on Tuesday, driven by higher US Treasury yields. Market expectations suggest that the Federal Reserve will maintain its monetary policy unchanged during the March meeting scheduled for Wednesday. The Fed is under pressure to prolong its elevated interest rates in response to recent inflationary pressures.

Bond markets are experiencing selling pressure as further signs of resilience in the United States (US) economy emerge, leading traders to adjust their expectations for fewer interest rate cuts this year. The likelihood of rate cuts in June and July has decreased, standing at 55.1% and 73.7%, respectively.

In February, the Swiss Trade Balance revealed a surplus of 3662 million, surpassing expectations of 3500 million but declining from January's 4,701 million. Imports (MoM) increased to 18,812 million from the previous reading of 18,046 million, while monthly exports decreased to 22,474 million from 22,746 million prior.

The Swiss National Bank (SNB) forecasts inflation to average 1.9% in 2024. Presently, the inflation rate is notably below this projection at 1.2%. However, there was a notable increase in the Consumer Price Index (CPI) in February, rising by 0.6% compared to 0.2% previously on a monthly basis.

Market participants are eagerly awaiting the Swiss National Bank (SNB) March policy meeting scheduled for Thursday. According to Reuters, there is a 29% probability of the SNB trimming its 1.75% policy rate at the meeting. A rate cut by the SNB could potentially weaken the Swiss Franc (CHF) as lower interest rates typically attract fewer foreign capital inflows.

• USD/CHF edges lower to 0.8535 in Monday’s early European session. 
• The FOMC is anticipated to hold benchmark rates steady in the range of 5.25%–5.50% on Wednesday.
• The escalating Middle East geopolitical tension might lift the safe-haven flow, benefiting the Swiss Franc (CHF). 
• The US FOMC and SNB monetary policy meeting on Wednesday and Thursday will be a closely watched events. 

The USD/CHF pair loses traction amid the consolidation of the US Dollar (USD) during the early European session on Monday. Traders prefer to wait on the sidelines ahead of the US Federal Open Market Committee's (FOMC) monetary policy meeting on Wednesday, with no change in rate expected. USD/CHF currently trades near 0.8535, losing 0.04% on the day. 

The FOMC will announce its interest rate decision on Wednesday. Investors anticipate the FOMC to hold benchmark interest rates steady in the range of 5.25%–5.50% at its March meeting. Financial markets have priced in nearly 75% odds that the FOMC will cut rates in July, according to the CME FedWatch Tools. That being said, the higher-for-longer interest rate narrative in the US might lift the Greenback and create a tailwind for the USD/CHF pair in the near term. 

About the data, the University of Michigan reported on Friday that the Consumer Sentiment Index dropped to 76.5 in March from the previous reading and the expectation of 76.9. Meanwhile, the UoM one-year and five-year inflation expectations were unchanged at 3.0% and 2.9%, respectively. Industrial Production rose to 0.1% MoM in February from a 0.5% MoM fall in January.

On the other hand, Anadolu Agency reported that Israeli warplanes launched fresh airstrikes in southern Lebanon on Sunday. Additionally, the Lebanese group Hezbollah said it struck a gathering of Israeli soldiers with “appropriate weapons” near the village of Wazzani, resulting in direct hits. The rising geopolitical tension between Lebanon and Israel, and in the Middle East could boost safe-haven assets like the Swiss Franc (CHF) and cap the upside of the USD/CHF pair. 

Apart from this, the Swiss National Bank (SNB) is likely to leave the interest rate unchanged on Thursday. However, Bloomberg economists expect the SNB to lower interest rates sooner than previously predicted, with the first 25 basis points (bps) coming in June. 

Moving on, the Swiss Trade Balance for February will be due on Tuesday. On Wednesday, market players will closely watch the FOMC rate decision. The focus will shift to the Swiss National Bank's (SNB) interest rate decision on Thursday. These events could give a clear direction to the USD/CHF pair. 

• USD/CAD strengthens as market sentiment suggests the Fed could prolong higher interest rates.
• The uptrend in US Treasury yields has bolstered the US Dollar.
• SNB’s Jordan has voiced concerns that the CHF has an adverse impact on Swiss businesses.

USD/CHF appreciates for the third consecutive day on Friday, advancing to around 0.8850 during the Asian trading hours. The strong Producer Price Index (PPI) data from the United States (US), has contributed to the strength of the USD/CHF pair.

Furthermore, the US Dollar Index (DXY) benefits from the hawkish sentiment surrounding the US Federal Reserve, contemplating maintaining its higher interest rates in response to persistent inflationary pressures. Additionally, US Treasury yields have risen for the past four consecutive sessions, lending further support to the US Dollar (USD), consequently, underpinning the USD/CHF pair.

The US Core Producer Price Index (PPI) remained stable with a 2.0% year-over-year increase in February, surpassing the expected 1.9%. The US PPI (YoY) recorded a 1.6% increase, exceeding both the anticipated 1.1% and the previous 1.0%. Furthermore, the Retail Sales Control Group showed improvement, reaching a flat 0.0% compared to the previous decline of 0.3%.

These recent economic indicators complicate the Federal Reserve's decision-making process regarding interest rate cuts. According to the CME FedWatch Tool, the likelihood of a rate cut in March currently stands at only 1.0%, dropping to 7.7% for May. The probabilities for rate cuts in June and July are relatively lower, at 59.0% and 79.4%, respectively.

In Switzerland, Producer and Import Prices decreased by 2.0% year-on-year in February 2024, showing a slight improvement from the previous month's 2.3% decline, which marked the sharpest drop since December 2020. This decline marks the tenth consecutive period of decrease. Monthly, prices increased by 0.1%, rebounding from a 0.5% fall in the previous month.

The Swiss Franc (CHF) faces challenges as the Swiss National Bank (SNB) adjusts its policy stance, no longer prioritizing a strong domestic currency. SNB Chairman Thomas Jordan has expressed concerns about the Swiss Franc's excessive strength, particularly its impact on Swiss businesses, especially exporters. These concerns are reflected in data from Switzerland's Foreign Exchange Reserves (CHFER), which show a recovery in Forex reserves.

• USD/CHF appreciates for the second day on upbeat US CPI figures.
• CME FedWatch Tool indicates expectations for a rate cut in July have surged to 84.2%.
• Swiss Franc encounters challenges as the SNB shifts its stance on the strength of CHF.

USD/CHF continues to strengthen for the second consecutive day during Thursday's Asian session, inching closer to 0.8790. The pair's appreciation is fueled by a stronger US Dollar (USD) supported by higher US Treasury yields, possibly driven by recent data on “resilient inflation” from the United States (US).

The upbeat US Consumer Price Index (CPI) has tempered expectations for near-term interest rate cuts by the Federal Reserve (Fed). However, market sentiment still leans towards a rate reduction in June, with a likelihood of 67.2%, according to the CME FedWatch Tool. Moreover, expectations for a rate cut in July have surged to 84.2%.

US Treasury Secretary Janet Louise Yellen remarked that it appears unlikely for interest rates to revert to levels as low as those before the Covid-19 pandemic. She also noted that the interest rate assumptions outlined in President Biden's budget plan were deemed "reasonable" and aligned with a broad spectrum of forecasts.

On the other side, the Swiss Franc (CHF) encounters challenges as the Swiss National Bank (SNB) shifts its stance, no longer aiming to promote a strong domestic currency. Moreover, the prevailing risk-on sentiment exerts downward pressure on the Swiss Franc, traditionally considered a safe haven currency.

SNB Chairman Thomas Jordan expressed concerns about the Swiss Franc's excessive strength, particularly for Swiss businesses, especially exporters. His remarks align with data from Switzerland's Foreign Exchange Reserves (CHFER), indicating a recovery in Forex reserves. This suggests that the SNB may be selling Swiss Francs to purchase other currencies, aiming to mitigate the CHF's appreciation.

Meanwhile, the consumer confidence indicator in Switzerland continued its decline, reaching -42.3 in February from January's -41.1. This downward trend reflects heightened concerns regarding personal financial situations and the overall economy in the coming months compared to the previous period. Thursday will see the release of Producer and Import Prices for February, offering further insights into Switzerland's economic landscape.

• USD/CHF trades sideways around 0.8776 in Wednesday’s Asian session. 
• The US CPI figure climbed 3.2% from a year earlier in February vs. 3.1% prior.
• The rising Middle East geopolitical tensions and risk-averse environment could lift the CHF. 
• Traders will watch the Swiss Producer and Import Prices and US Retail Sales February, due on Thursday. 

The USD/CHF pair remains confined in a narrow trading range of 0.8765-0.8780 during the Asian trading hours on Wednesday. The stronger-than-expected US CPI inflation data in February lift the US Dollar (USD). Nonetheless, the risk-averse environment might boost safe-haven demand and benefit the Swiss Franc (CHF). The pair currently trades near 0.8776, adding 0.02% on the day. 

Inflation remains elevated in the United States in February. The Labor Department reported on Tuesday that the Consumer Price Index (CPI) climbed 3.2% from a year earlier from 3.1% in January. On a monthly basis, the headline CPI figure increased by 0.4% from the previous month of a 0.3% gain. Additionally, the Core CPI, excluding volatile food and energy items, rose 0.4% MoM in February, above the market consensus of 0.3%. 

The hotter CPI inflation report might influence Federal Reserve (Fed) officials to wait until the summer before beginning to cut interest rates. This, in turn, provides some support for the Greenback. Fed Chair Jerome Powell said last week that the Fed is likely to cut the interest rate this year, but the central bank needs to see more evidence of inflation data to ensure that inflation returns to the 2% target. Investors are pricing in 70% odds of rate cuts in June, according to the CME FedWatch tool.

On the other hand, the escalating geopolitical tensions in the Middle East, uncertainty, and risk-averse environment could boost safe-haven assets like CHF and create a headwind for the USD/CHF pair. 

In the absence of the top-tier economic data released from the US and Swiss dockets on Wednesday, the pair remains at the mercy of the USD price dynamics and the broader risk sentiment. On Thursday, the Swiss Producer and Import Prices and US Retail Sales February will be released.  

• USD/CHF consolidates near 0.8772 in Tuesday’s early European session. 
• Fed officials highlighted that the central bank remained data-dependent before they were confident that inflation is sustainably returning 2% target.
• The rising concerns in the Middle East could lift the Swiss Franc, a safe-haven currency. 
• Market players will closely monitor the US February CPI inflation data on Tuesday. 

The USD/CHF pair trades sideways above the mid-0.8700s during the early European session on Tuesday. Investors prefer to wait on the sidelines ahead of the key US inflation report later in the day. In the meantime, a cautious mood in the market could provide some support to the Swiss Franc (CHF). USD/CHF currently trades around 0.8772, unchanged for the day. 

The Federal Reserve's (Fed) officials emphasized last week that the US central bank remains data-dependent and wants to feel confident that inflation is sustainably returning to the Fed’s 2% target. Money markets have priced in 70% odds of a rate cut in June, while the chance for a May rate cut stays at 22%, according to the CME FedWatch Tool. Investors await the US CPi inflation data for fresh impetus. 

The headline CPI figure is forecast to remain steady at 3.1% YoY in February, while the Core CPI figure is estimated to drop to 3.7% YoY in February from 3.9% in January. This data could trigger volatility in the market. The stronger-than-expected report could dampen hopes of a rate cut by the Fed, which might lift the US Dollar (USD) and create a tailwind for USD/CHF. 

On the other hand, the rising geopolitical tensions in the Middle East could boost safe-haven assets like the Swiss Franc (CHF) and cap the upside of the pair. There are rising concerns of violence spreading, especially to Jerusalem, during the Islamic holy month of Ramadan, as a ceasefire remains elusive, per the BBC. 

Moving on, investors will closely watch the US February CPI inflation data, due later in the day. Later this week, the focus will shift to US Retail Sales for February, which is expected to show an increase of 0.8% YoY. On Friday, the US Industrial Production and Michigan Consumer Sentiment Index will be released.

• USD/CHF holds positive ground near 0.8777 in Monday’s early European session. 
• The US economy added 275,000 jobs in February vs. 229,000 prior, better than expected. 
• The rising Middle East geopolitical and economic uncertainties might lift safe-haven assets like the Swiss Franc (CHF). 
• The US February CPI and Retail Sales data will be closely watched this week. 

The USD/CHF pair posts modest gains below the 0.8800 psychological barrier during the early European session on Monday. The prospect that the Federal Reserve (Fed) will cut the interest rate this year exerts some selling pressure on the US Dollar (USD) and creates a headwind for the pair. Investors will closely watch the US CPI inflation on Tuesday for fresh impetus. At press time, USD/CHF is trading at 0.8777, up 0.04% on the day. 

The Federal Reserve (Fed) Chair, Jerome Powell, said during his semi-annual testimony last week that the US economy is robust and that the Fed is close to having enough confidence in inflation's downward track to begin lowering rates. According to the CME FedWatch Tools, futures markets have priced in around a 70% chance that the Fed will begin cutting interest rates by mid-June, with a full percentage point of rate reductions expected by year-end. 

The US Labor Department reported on Friday that the US economy added 275,000 jobs in February, up from 229,000 in January, better than the estimation of 200,000. Furthermore, the Unemployment Rate in the US climbed to 3.9% in the same month from 3.7% in January. The figure registered its highest level in two years. The US wage growth, as measured by Average Hourly Earnings, rose by 4.3% YoY in February versus 4.4% prior, below the market consensus of 4.4%.  

On the Swiss front, the ongoing geopolitical tensions in the Middle East and the economic uncertainties in major countries might boost safe-haven demand and benefit the Swiss Franc (CHF). In the Middle East, Hamas leader Ismail Haniyeh blamed Israel on Sunday for impeding cease-fire talks and rejecting Hamas' desire to stop the bloodshed in Gaza. Meanwhile, tensions are rising in Russia and its neighboring territories, raising fears about a possible war escalation beyond Ukraine. 

Traders will monitor the US February CPI and Retail Sales, due on Tuesday and Thursday, respectively. The headline CPI figure is forecast to remain steady at 3.1% YoY in February, while Retail Sales are estimated to improve to 0.7%. Traders will take cues from the data and find trading opportunities around the USD/CHF pair. 

Economists at HSBC analyze the Swiss Franc (CHF) outlook.

EUR/CHF is likely to track sideways

• USD/CHF loses traction near 0.8775 on the softer USD in Friday’s Asian session. 
• Fed’s Powell said he still expects to cut rates this year as long as the data continues to cooperate.
• Swiss Unemployment Rate eased to 2.4% in February from 2.5% in January. 
• US February Nonfarm Payrolls and Unemployment Rate will be closely watched by traders. 

The USD/CHF pair trades in negative territory below the 0.8800 mark during the Asian session on Friday. All eyes are on the US Nonfarm Payrolls (NFP) report due later on Friday. However, the cautious mood in the market might lift the safe-haven Swiss Franc (CHF) against the US Dollar (USD). At press time, USD/CHF is trading at 0.8775, down 0.03% on the day. 

Fed Chair Jerome Powell reiterated on Thursday that he still expects to cut interest rates this year as long as the economic data continues to cooperate. However, the Fed officials need more confidence that inflation is returning to 2% before considering rate cuts. The US labor market data later in the day might offer some hints about the economic health of the US, influencing monetary policy decisions and market sentiment. The stronger-than-expected data could boost the Greenback and act as a tailwind for the USD/CHF pair. 

On the Swiss front, Data released from the State Secretariat for Economic Affairs (SECO) on Thursday revealed that Switzerland’s Unemployment Rate eased to 2.4% in February from 2.5% in January. 

Furthermore, the fall in Swiss inflation in February might fuel expectations that the Swiss National Bank (SNB) could cut interest rates later this month. The interest rate in Switzerland has stood at 1.75%, unchanged since June 2023. Financial markets expect the SNB to lower rates in the coming weeks.

Market players will focus on the US Nonfarm Payrolls for February, which is expected to see a 200K job addition. Additionally, the Unemployment Rate is forecast to hold steady at 3.7%, and finally, the Average Hourly Earnings are projected to drop to 0.2% MoM from 0.6% MoM in January.