USD/CHF extends losses to near 0.9050 ahead of US inflation data

• USD/CHF edges lower due to a decline in the US Dollar and lower US yields.
• Fed Chair Jerome Powell has anticipated a sustained decrease in inflation, indicating diminished confidence in the disinflation outlook.
• Swiss Producer and Import Prices dropped 1.8% in April, marking the twelfth consecutive period of decrease.

USD/CHF edges lower for the second successive session, trading around 0.9060 during the Asian hours on Wednesday. The decline of the USD/CHF pair could be attributed to the weaker US Dollar (USD) as investors shrugged off the higher-than-expected US Producer Price Index data for April. Investors will likely await the Consumer Price Index report scheduled for Wednesday.

The US Bureau of Labor Statistics (BLS) reported that the Producer Price Index (PPI) rose 0.5% MoM in April, surpassing the market expectations of a 0.3% increase. The producer prices have rebounded from March's contraction of 0.1%. Additionally, the Core PPI, which excludes volatile food and energy prices, also surged 0.5% month-over-month, exceeding projections of 0.2%.

Federal Reserve Chair Jerome Powell shared his views after the release of US PPI. According to a Reuters report, Powell has anticipated a continued decline in inflation and expressed less confidence in the disinflation outlook compared to previous assessments. He also highlighted that Gross Domestic Product (GDP) growth is expected to reach 2% or higher, attributing this positive forecast to the strength of the labor market.

In Switzerland, Producer and Import Prices (YoY) dropped 1.8% in April, marking a slight improvement from the preceding decline of 2.1%. This marks the twelfth consecutive period of decrease, albeit at the slowest rate since December 2023. On a monthly basis, the measure of consumer price inflation increased by 0.6%, following a 0.1% rise in the previous month.

Furthermore, traders are expected to closely monitor Industrial Production (YoY) for the first quarter, scheduled for release on Friday. This report will provide insights into the volume of production across industries such as factories and manufacturing in Switzerland.