USD/CHF hovers around 0.9100 with a positive sentiment

• USD/CHF appreciates as the US Dollar recovers its daily losses amid improved US Treasury yields.
• Softer US inflation and employment data have fueled speculation about potential rate cuts by the Fed in 2024.
• 10-year Swiss yield inched higher, indicating expectations of SNB maintaining current interest rates.

USD/CHF continues its winning streak for the third day, trading around 0.9100 during the early European hours on Monday. The upside of the USD/CHF pair could be attributed to the improved US Dollar (USD). It is worth noting that Swiss markets are closed due to the Whit Monday bank holiday.

However, the easing of the US consumer inflation and labor market data has fueled speculation about potential rate cuts by the Federal Reserve (Fed) in 2024. According to the CME FedWatch Tool, the likelihood of the Federal Reserve delivering a 25 basis-point rate cut in September has slightly increased to 49.0%, up from 48.6% a week ago. This potential easing of monetary policy by the central bank could undermine the US Dollar and limit the advance of the USD/CHF pair.

Fed officials maintained a cautious stance regarding interest rates, emphasizing that a one-time decline in inflation is insufficient to build confidence that price pressures will sustainably return to the desired 2% rate. Investors await the Federal Open Market Committee (FOMC) minutes due on Wednesday. The FOMC minutes are expected to show that policymakers stressed the need to keep higher interest rates for longer.

On the Swiss side, the yield on the 10-year Swiss government bond inched higher to around 0.7%. This increase in Swiss yield typically indicates the Swiss National Bank (SNB) to maintain current interest rates, which could strengthen the CHF. SNB unexpectedly cut interest rates for the first time in nine years in March, reducing the key interest rate by 25 basis points to 1.50%, making it the first major central bank to ease its monetary policy.

For further cues on the Swiss economy, traders will likely observe the Employment Level released by the Swiss Statistics later in the week. Also, the Swiss National Bank (SNB) Chairman Thomas Jordan will deliver a speech about communication, monetary policy, and public impact at the Swiss Media Forum in Lucerne, Switzerland on Friday.