Ella 
USD/CHF extended losses for the second consecutive trading day, trading around 0.8490 during the Asian session on Friday. USD/CHF’s decline may have been driven by a move lower by U.S. economic data on Friday, which raised the possibility of a sharp rate cut by the Federal Reserve (Fed) next week.
Markets fully expect the Fed to cut interest rates by at least 25 basis points at its September meeting, according to the CME FedWatch tool. The probability of a 50 basis point rate cut rose sharply to 41.0% from 14.0% a day ago.
Falling U.S. Treasury yields also put downward pressure on the dollar. The U.S. Dollar Index (DXY), which measures the dollar’s value against six major currencies, is currently trading around 101.10, with 2-year and 10-year U.S. Treasury yields at 3.58% and 3.64% at press time.
Former New York Federal Reserve Chairman Bill Dudley said there was good reason for a 50 basis point rate cut in the United States. According to Reuters, Dudley said at the Bretton Woods Committee’s annual forum on the future of finance in Singapore: “I think there is a strong case for a 50 basis point cut in interest rates, whether they do it or not. ”
Last week, Swiss consumer prices fell 1.1% year-on-year in August. Meanwhile, the monthly index was unchanged after rising 0.1% in the previous reading. The inflation report further fueled speculation that the Swiss National Bank (SNB) is about to cut interest rates in September.
Markets expect the SNB to cut interest rates by 25 basis points at its September meeting. Traders are likely to watch next week’s trade balance data to gauge the size of a rate cut before the end of the year.
