Anna 
USD/CHF stages a recovery, edging higher to nearly 0.8700 during the early European hours on Wednesday. The US Dollar (USD) contends with challenges arising from lower yields on US Treasury bonds, thereby exerting downward pressure on the USD/CHF pair.
The US Dollar Index (DXY) continues its descent, hovering around 104.00, with the 2-year and 10-year yields on US bond notes at 4.39% and 4.02%, respectively, at the time of writing. However, the bearish momentum of the Greenback finds some restraint in the wake of hawkish comments from US Federal Reserve (Fed) Chair Jerome Powell. Powell tempered market expectations of a rate cut in March and emphasized the importance of vigilant monitoring of inflation as it approaches the Fed’s 2% core target.
Adding to the discourse, Fed Bank of Cleveland President Loretta Mester suggested on Tuesday that the US central bank might entertain the possibility of reducing interest rates later in the year. Concurrently, Fed Bank of Philadelphia President Patrick Harker expressed support for maintaining unchanged interest rates last week, citing an outlook indicative of ongoing declines in inflation.
Upcoming speeches by Fed members Adriana D. Kugler and Thomas I. Barkin are anticipated to be closely scrutinized by market participants for further insights into the Federal Reserve’s stance on monetary policy.
Meanwhile, in Switzerland, the non-seasonally adjusted Swiss Unemployment Rate (YoY) rose to 2.5% in January from the previous figure of 2.3%. The seasonally adjusted Unemployment Rate (MoM) remained unchanged at the expected 2.2%. Additionally, Foreign Currency Reserves increased to 662 billion in January from the previous figure of 654 billion.
Projections for the current year suggest that inflation in Switzerland is expected to average below the 2.0% threshold. Analysts anticipate that the Swiss National Bank (SNB) might initiate its first rate cut in September 2024 in response to these considerations.
