CFD Trading Rate US Dollar vs Swiss Franc (USDCHF)

• USD/CHF recovers some lost ground around 0.8845 in Friday’s early Asian session. 
• US PCE rose by 2.4% YoY in January vs. 2.6% prior; Core PCE eased to 2.8% YoY vs. 2.9% previously. 
• Switzerland's GDP grew by 0.3% QoQ in the fourth quarter (Q4) of 2023. 

The USD/CHF pair holds positive ground around the mid-0.8800s during the early Asian trading hours on Friday. The recovery of the pair is bolstered by the firmer US dollar (USD). Investors await the Swiss Real Retail Sales and US ISM Manufacturing PMI, due on Friday. The pair currently trades near 0.8845, gaining 0.04% on the day. 

On Thursday, the US Personal Consumption Expenditures Price Index (PCE) rose by 2.4% YoY in January, a slowdown from December’s reading of 2.6%. The Federal Reserve's (Fed) preferred inflation gauge, Core PCE, eased to 2.8% YoY from 2.9% in the previous reading, in line with the estimation. 

Furthermore, the weekly Initial Jobless Claims for the week ending February 24 totaled 215K from the previous reading of 202K, worse than the expectation of 210K. Continuing Claims rose to 1.905 million, higher than the forecast of 1.874 million.

The January inflation data increases uncertainty and delays expectations of a rate cut, which boosts the US Dollar (USD) against its rivals. The Fed officials will monitor the inflation data, and the policymakers will likely set the table for interest-rate cuts later this year.

On the Swiss front, Switzerland's Gross Domestic Product (GDP) grew by 0.3% QoQ in the fourth quarter (Q4) of 2023, better than the estimation of 0.1%, according to the State Secretariat for Economic Affairs (SECO) on Thursday. 

Moving on, traders will monitor the Swiss January Real Retail Sales, which is estimated to improve from a 0.8% decline to a 0.4% rise. Also, the US ISM Manufacturing PMI, Michigan Consumer Sentiment Index, and S&P Global Manufacturing PMI will be released from the US docket. Traders will take cues from the data and find trading opportunities around the USD/CHF pair. 

• USD/CHF maintains its stability ahead of US PCE - Price Index data.
• CME FedWatch Tool indicated the chances for rate cuts in March are at 3.0%, with 19.3% in May and 52.6% in June.
• ZEW Survey – Expectations improved to 10.2 from the previous 19.5 drop.

USD/CHF moves sideways amid a tepid US Dollar (USD) despite improved US Treasury yields. The pair hovers around 0.8790 during the Asian trading hours on Thursday. The US Dollar Index (DXY) edges lower to near 103.90 with 2-year and 10-year yields on US Treasury coupons standing at 4.65% and 4.28%, respectively, by the press time.

The preliminary US Gross Domestic Product Annualized (Q4) rose by 3.2%, against the expected 3.3%. Additionally, the preliminary US Gross Domestic Product Price Index (Q4) increased by 1.7%, surpassing both expected and previous rises of 1.5%. These figures have led financial markets to delay expectations for the Federal Reserve’s (Fed) first rate cut, providing some support to the US Dollar (USD).

According to the CME FedWatch Tool, the odds for rate cuts in March are at 3.0%, with probabilities decreasing to 19.3% in May and increasing to 52.6% in June. New York Federal Reserve (Fed) President John Williams stated on Wednesday that while there is still progress to be made in reaching the Fed's 2% inflation target, the possibility of interest rate cuts this year remains on the table, contingent upon incoming data. Traders are eagerly awaiting the release of key US Personal Consumption Expenditures - Price Index data, which could potentially influence the Federal Reserve's monetary policy stance.

On the Swiss side, the ZEW Survey – Expectations indicated improved business conditions for February, with a reading of 10.2, up from the previous drop to 19.5. Additionally, support stemmed from expectations of lower interest rates by the Swiss National Bank (SNB) in the second half of the year. Moreover, investors are anticipating the Gross Domestic Product (GDP) data by the Swiss State Secretariat for Economic Affairs (SECO) on Thursday, which is expected to report a decline in the fourth quarter of 2023.

• USD/CHF improves to near 0.8800 ahead of Swiss ZEW Survey Expectations.
• Swiss GDP is expected to report a decline in the fourth quarter of 2023.
• US GDP is anticipated to remain unchanged at 3.3% in the fourth quarter of 2023.

USD/CHF rebounds after two days of losses, improving to near psychological level of 0.8800 during the Asian trading hours on Wednesday. The Swiss Franc (CHF) receives downward pressure ahead of the Swiss ZEW Survey – Expectations, scheduled to be released later in the day.

Furthermore, investors await the Gross Domestic Product (GDP) by the Swiss State Secretariat for Economic Affairs (SECO) on Thursday, which is expected to report a decline in the fourth quarter of 2023.

Furthermore, the Swiss Real Retail Sales conducted by the Swiss Federal Statistical Office will be released on Thursday. The market expectation is to grow by 0.4% year-over-year in January, swinging from the previous decline of 0.8% in December.

On the other side, market expectations anticipate that the US GDP will remain steady at 3.3% in the fourth quarter of 2023. The Federal Reserve (Fed) has signaled caution regarding any hasty reductions in interest rates, leading to a decreased likelihood of a rate cut in March. This has exerted downward pressure on the US Dollar (USD).

According to the CME FedWatch Tool, the probability of rate cuts in March has decreased to 1.0%, while the likelihood of cuts in May and June stands at 21% and 49.8%, respectively.

US Housing Price Index (MoM) increased by 0.1% in December, falling short of both the expected 0.3% increase and the prior 0.4% increase. Additionally, US Durable Goods Orders declined by 6.1%, contrasting with an expected decrease of 4.5% and a previous decrease of 0.3%.

• USD/CHF trades sideways near 0.8800 as the focus shifts to US economic data.
• The Swiss economy is expected to have growth at a moderate pace of 0.1% in the last quarter of 2023.
• Fed policymakers support holding interest rates unchanged in the range of 5.25%-5.50%.

The USD/CHF is stuck in a tight range near the round-level resistance of 0.8800 since Friday’s trading session. The Swiss Franc asset struggles to find a direction as investors await the United States core Personal Consumption Expenditure price index (PCE) and Swiss Q4 Gross Domestic Product (GDP) data for further guidance.

The US Dollar edges down in Tuesday’s trading session. Further action in the US Dollar will be guided by the US core PCE price index data, which will influence market expectations for the Federal Reserve’s (Fed) rate cuts.

Meanwhile, Fed policymakers argue in favor of holding interest rates unchanged in the range of 5.25%-5.50% until they get evidence that inflation will fall sustainably to the required rate of 2%.

On the Swiss front, investors await the Q4 GDP data, which will be published on Thursday. Investors anticipate the economy grew modestly by 0.1% in the October-December quarter against 0.3% in the third quarter of 2023.

USD/CHF consolidates in a narrow range around 0.8800. The broader outlook remains bullish as the pair trades in a Rising Channel chart pattern formed on a four-hour timeframe. In the aforementioned chart pattern, market participants consider each pullback a buying opportunity.       

The 50-period Exponential Moving Average (EMA) at 0.8800 remains sticky with spot prices, indicating a sideways trend.

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, demonstrating a sharp volatility contraction.

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 13 low at 0.8746 would expose the asset to round-level support of 0.8700, followed by February 1 high around 0.8650.

USD/CHF four-hour chart

• USD/CHF trades sideways near the 0.8800 mark in Tuesday’s early European session. 
• The FOMC minutes indicated that policymakers were worried about moving too fast to cut their rate and preferred to wait for more data. 
• The markets expect the SNB to start rate cuts in September, even though the recent inflation data might speed up the timeline. 

The USD/CHF pair consolidates in a narrow trading range during the early European session on Tuesday. Investors seem to prefer to wait on the sidelines ahead of key events from the US and Swiss dockets. Meanwhile, the decline of the US Dollar (USD) weighs on the pair. At press time, USD/CHF is trading at 0.8798, adding 0.02% on the day. 

Several Federal Reserve (Fed) officials expressed concern that strong growth in spending and hiring could disrupt that progress to bring inflation down to the 2% target. The FOMC meeting minutes last week indicated that the central bank was also worried about moving too fast to cut their benchmark interest rate and preferred to wait for additional evidence of inflation data before making the decision on easing policy. Investors will take more cues from the Core Personal Consumption Expenditures Price Index (Core PCE), the Fed's preferred inflation gauge, due on Thursday. The stronger-than-expected data might support the case for keeping the rate high for longer and this might lift the US Dollar (USD). 

On the Swiss front, Swiss National Bank (SNB) President Thomas Jordan said that while inflation wouldn’t exceed the central bank’s target between 0 and 2%, he still sees it approaching the range’s ceiling. The markets expect the SNB to begin rate cuts in September, even though the recent Swiss inflation data might speed up that schedule. 

Apart from this, Yemen’s Iranian-backed Houthi movement has attacked merchant ships for months, proclaiming solidarity with Palestinians as Israel wages war against Hamas in the Gaza Strip. That being said, the escalating geopolitical tensions in the Middle East might boost the traditional safe-haven currency like the Swiss Franc (CHF).

Looking ahead, the release of the US Gross Domestic Product (GDP) for Q4 will be the highlight on Wednesday. On Thursday, the attention will shift to the Swiss Q4 GDP growth numbers and the US Core PCE. These events could give a clear direction to the USD/CHF pair. 

• USD/CHF oscillates in a narrow range of 0.8800-0.8825 in Monday’s early European session. 
• The upbeat US inflation data and hawkish comments from Fed officials prompted markets to lower bets on rate cuts this year. 
• The rising geopolitical tension in the Red Sea might lift a safe-haven currency like the Swiss Franc (CHF). 

The USD/CHF pair trades sideways above the 0.8800 mark during the early European session. The US and Swiss Gross Domestic Product (GDP) for the fourth quarter (Q4) could provide a clear direction to the pair. The annualized US GDP growth number is estimated to remain steady at 3.3%. USD/CHF currently trades around 0.8811, unchanged for the day. 

The US inflation data in January and the cautious comments from Federal Reserve (Fed) officials have prompted markets to pull back expectations on rate cuts. Investors expect three interest rate cuts for 2024, down from six cuts anticipated in December. 

Investors will closely watch the US Personal Consumption Expenditures Price Index (Core PCE), the Fed’s preferred inflation measure, due on Thursday. The report could offer some hints as to whether inflation is easing or elevated. The stronger data might lift the Greenback against its rivals. 

The United States and Britain hit 18 Houthi targets in Yemen, responding to a recent rise in attacks on ships in the Red Sea and Gulf of Aden by the Iran-backed militia group, including a missile strike this week that set fire to a cargo tanker. The rising geopolitical tension in the Red Sea might boost a safe-haven currency like the Swiss Franc (CHF) and act as a headwind for the USD/CHF pair.

Looking ahead, the US Durable Goods Orders and Consumer Confidence will be due on Tuesday. On Wednesday, the US GDP growth numbers for Q4 will be released. The Swiss GDP report and the US Q4 Core Personal Consumption Expenditures Price Index (Core PCE) on Thursday will be the highlights this week. 

• USD/CHF trades with a mild positive bias, though subdued USD demand caps any meaningful gains.
• The Fed’s hawkish outlook remains supportive of elevated US bond yields and favours the USD bulls.
• A sustained move beyond the 200-day SMA is needed to reaffirm the near-term constructive outlook.

The USD/CHF pair ticks higher during the Asian session on Friday, albeit lacks bullish conviction and remains confined within the previous day's broader range. Spot prices currently trade around the 0.8800 mark, comfortably above a one-and-half-week low touched on Thursday and remain at the mercy of the US Dollar (USD) price dynamics.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, struggles to capitalize on the previous day's goodish rebound from its lowest level in almost three weeks and acts as a headwind for the USD/CHF pair. That said, growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer favours the USD bulls and suggests that the path of least resistance for the currency pair is to the upside.

In fact, the minutes of the late January FOMC policy meeting released on Wednesday revealed that policymakers were concerned about cutting interest rates too quickly amid sticky inflation and a still-resilient US economy. Moreover, Fed officials reiterated the message that the central bank was in no hurry to ease its monetary policy. This remains supportive of elevated US Treasury bond yields and validates the positive setup for the Greenback.

Apart from this, the prevalent risk-on environment, which tends to undermine the safe-haven Swiss Franc (CHF), supports prospects for a further near-term appreciating move for the USD/CHF pair. Even from a technical perspective, spot prices showed resilience below the 100-day Simple Moving Average (SMA), which, along with positive oscillators on the daily chart, reaffirms the near-term constructive outlook for the currency pair.

That said, it will still be prudent to wait for sustained strength and acceptance above the very important 200-day SMA before placing fresh bullish bets around the USD/CHF pair. There isn't any relevant market-moving economic data due for release from the US on Friday. Hence, the US bond yields will continue to play a key role in driving demand for the USD. This, along with the broader risk sentiment, should provide some impetus to the major.

Technical levels to watch

• 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.