Ella 
USD/CHF broke a six-day losing streak and was trading around 0.8590 during the Asian session on Wednesday. The gains were attributed to a rise in U.S. Treasury yields, which led to a stronger U.S. dollar (USD). The U.S. dollar index (DXY) extended gains for a second day in a row, reaching 103.30. At press time, the 2-year and 10-year U.S. Treasury yields were 4.02% and 3.91%, respectively.
However, expectations are growing for more aggressive interest rate cuts starting in September after weak U.S. jobs data in July, fueling fears of a looming U.S. recession. This could limit the upside for USD/CHF. According to the CME FedWatch tool, the chance that the U.S. Federal Reserve (Fed) will cut interest rates by 50 basis points (bps) in September is now 67.5%, up from 13.2% a week ago.
According to Reuters, San Francisco Federal Reserve President Mary Daly said on Monday that “risks to the Fed’s mission are becoming more balanced and it is open to the possibility of cutting interest rates at the upcoming meeting.”
In Switzerland, actual retail sales unexpectedly fell 2.2% year-on-year in June, missing market expectations for a 0.5% rise and following a revised 0.2% decline in May. Data on Tuesday showed retail sales contracted for the second consecutive month and the largest decline since September 2023.
Switzerland’s non-seasonally adjusted unemployment rate held steady at 2.3% in July, unchanged from the previous three months. However, the seasonally adjusted unemployment rate rose slightly to 2.5% from 2.4% previously.
Traders are likely to focus on foreign exchange reserves data from the Swiss National Bank (SNB) due to be released on Wednesday. This information will reveal the Swiss National Bank’s activities in the currency markets, particularly its efforts to influence the Swiss franc exchange rate.
