Anna 
During the early European trading hours on Monday, USD/CHF continued its upward trajectory for the third consecutive day, hovering around the 0.9100 level. The surge in the USD/CHF pair can be attributed to the strengthening of the US Dollar (USD). Notably, Swiss markets remained closed in observance of the Whit Monday bank holiday.
However, despite the USD’s strength, concerns loom over potential rate cuts by the Federal Reserve (Fed) in 2024, fueled by the recent easing of US consumer inflation and labor market data. The likelihood of a 25 basis-point rate cut by the Fed in September has slightly increased to 49.0%, as per the CME FedWatch Tool. Such a move could potentially undermine the US Dollar and curb the advance of the USD/CHF pair.
Fed officials have maintained a cautious stance on interest rates, highlighting that a single decline in inflation is insufficient to instill confidence in the sustained return of price pressures to the desired 2% rate. Market participants eagerly await the Federal Open Market Committee (FOMC) minutes scheduled for release on Wednesday, expected to shed light on policymakers’ emphasis on maintaining higher interest rates for an extended period.
On the Swiss front, the yield on the 10-year Swiss government bond saw a marginal increase to around 0.7%. Typically, a rise in Swiss yield signals the Swiss National Bank (SNB) to maintain current interest rates, potentially bolstering the Swiss Franc (CHF). In an unexpected move in March, the SNB cut interest rates for the first time in nine years, lowering the key interest rate by 25 basis points to 1.50%, establishing itself as the first major central bank to ease monetary policy.
Traders keenly await further insights into the Swiss economy, with attention focused on the upcoming release of the Employment Level by Swiss Statistics later in the week. Additionally, Swiss National Bank (SNB) Chairman Thomas Jordan is scheduled to deliver a speech on communication, monetary policy, and public impact at the Swiss Media Forum in Lucerne, Switzerland on Friday, providing additional cues for market participants.
