USD/CHF surges sharply and climbs above 0.8900 as SNB cut rates

• Swiss Franc weakens as SNB cuts rates from 1.50% to 1.25%, with potential for another cut in September.
• USD/CHF jumps from 0.8833 to 0.8911, breaching a key resistance level post-rate cut.
• Softer US jobless claims and deteriorating housing data increase speculation of Fed rate cuts in 2024.

The Swiss Franc extended its losses on Thursday after the Swiss National Bank (SNB) decided to cut rates for the second time in the year, lowering rates from 1.50% to 1.25% during the European session. The USD/CHF trades at 0.8911, up 0.83%.

USD/CHF jumped above 0.8900 after the Swiss National Bank reduced rates to 1.25%, hinting further easing

According to Reuters, the SNB looks likely to follow Thursday’s second consecutive rate cut in September. SNB Chairman Thomas Jordan said the CHF strengthened significantly in recent weeks, adding that the central bank is ready to intervene in the FX market.

If the SNB wants to prevent the Swissie from appreciating, it could slash rates in September instead of intervening and selling Francs in the markets.

The USD/CHF rose from around 0.8833 to 0.8911 in the first two hours after the SNB cut and breached a key resistance level.

Aside from this, the latest US Initial Jobless Claims report showed that more people than expected filed for unemployment benefits, highlighting that the labor market is cooling. With US housing deteriorating further, traders' hopes remained higher, and the Federal Reserve could cut rates at least twice.