Ella 
USD/CHF was trading weaker around 0.8905 in early European trading on Wednesday. The prospect of a rate cut by the U.S. Federal Reserve (Fed) this year supported the pair’s weakness, dragging the dollar lower across the board. Traders awaited the initial S&P Global Purchasing Managers’ Index (PMI) for July in the U.S. for fresh momentum.
Growing bets that the Federal Reserve will start easing monetary policy in September appear to have limited the dollar’s upside. Markets are pricing in two or three rate cuts this year. According to the CME FedWatch Tool, traders see an almost 96% chance that the Fed will cut rates in September this year.
However, key U.S. economic data later this week could change that probability. Investors expect an improvement in the U.S. manufacturing sector, and stronger-than-expected U.S. PMI data could limit the downside for USD/CHF. U.S. second quarter gross domestic product (GDP) will be released on Thursday, while June personal consumption expenditures price index (PCE) data will be released on Friday.
U.S. data released on Tuesday showed that existing home sales fell 5.4% month-on-month in June, from 4.11 million to 3.89 million, below market consensus. Meanwhile, the Richmond Fed Manufacturing Index for July was -17, compared with -10 in the previous session.
Expectations that the Swiss National Bank (SNB) may further cut interest rates in September dragged down the Swiss franc (CHF) in the previous trading days. Kyle Chapman, foreign exchange market analyst at Ballinger Group, said the SNB is expected to cut interest rates for the third time next quarter and may decide on a fourth rate cut in December. In addition, U.S. political uncertainty has also exacerbated volatility in the U.S. dollar (USD), boosting safe-haven assets such as the Swiss franc.
