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USD/CHF rose to around 0.8770 during Asian trading on Wednesday, boosted by a rebound in demand for the U.S. dollar. The U.S. Federal Reserve’s (Fed) interest rate decision will be in focus on Wednesday, with rates expected to remain unchanged. Market attention will turn to the Swiss National Bank (SNB) policy meeting later on Thursday.
The Fed is widely expected to keep the federal funds rate unchanged at its current range of 4.25% to 4.50%. Traders will be watching the press conference and the Summary of Economic Projections (SEP), or “dot plot,” for more clues on the future path of interest rates and the economic outlook. Any hawkish comments from Fed officials could boost USD/CHF in the short term. The probability of a rate cut at the May meeting has risen to 25% from 18% a month ago, according to the CME FedWatch tool.
The Swiss National Bank (SNB) is expected to cut its key policy rate by 25 basis points to 0.25% on Thursday and keep it at that level until at least 2026, according to most economists polled by Reuters. “I think the only major uncertainty for the SNB to keep rates unchanged at this meeting stems from a certain darkening of the global economic outlook,” said Claude Maurer, chief economist at BAK Economics in Basel.
Meanwhile, U.S. President Donald Trump and Russian President Vladimir Putin agreed on Tuesday to an immediate pause in strikes on energy infrastructure in the war in Ukraine. However, Putin refused to sign the one-month comprehensive ceasefire that the Trump team recently reached with the Ukrainians in Saudi Arabia. Traders will be watching for progress towards a comprehensive ceasefire between Russia and Ukraine. Rising geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict are likely to drive safe-haven inflows, benefiting the Swiss franc (CHF).
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