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In early European trading on Monday, USD/CHF expanded its upward trend to around 0.8770, the highest level since August 1. Strength in the U.S. dollar (USD) provided support for the pair’s upside as traders awaited U.S. inflation data and a Federal Reserve (Fed) spokesman this week.
Analysts expect Trump’s policies to put upward pressure on U.S. inflation and bond yields while slowing the Federal Reserve’s path to easing policy. This, in turn, will push up the USD/CHF exchange rate. “Given this, we still expect the Fed to cut interest rates by an additional 25bp at its December meeting, but only once per quarter thereafter, in contrast to our previous forecast of 25bp of cuts per meeting,” said J.P. Morgan economist Michael – Michael Feroli said.
Traders will get more clues from the U.S. Consumer Price Index (CPI) due on Wednesday. Headline consumer prices are expected to rise at an annual rate of 2.6% in October, while core consumer prices are expected to rise at an annual rate of 3.3% during the same period. If the outcome is hotter than expected, this could further reduce the likelihood of a rate cut in December, supporting the dollar.
Swiss National Bank (SNB) Vice Chairman Antoine Martin said on Monday that the central bank was not targeting more rate cuts in December, adding that everything would depend on where we stand when we assess the situation in December. . The market expects the SNB to cut at least 25 basis points (bps) from the current level of 1% at its next meeting on December 12.
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