- USD/CHF is trading on a stronger note around 0.8545 in the Asian session on Wednesday.
- Rising expectations of Fed rate cuts could limit the pair’s upside.
- Fed Chairman Jerome Powell’s speech on Friday will be closely watched.
The USD/CHF pair remains in positive territory near 0.8545 on Wednesday during early European trading hours. The modest recovery in the Dollar provides some support to the pair. However, the upside of the pair could be limited due to the growing expectation of the US Federal Reserve (Fed) cutting the interest rate at the September meeting. Traders await the minutes of the July Federal Open Market Committee (FOMC) meeting on Wednesday.
US monetary policy is imminently approaching its tipping point. The pace and number of rate cuts in this easing cycle will depend on the data. Markets are now pricing in a nearly 67.5% chance of a 25 basis point (bps) Fed rate cut at its September meeting, up from 76% a day ago, according to the CME’s FedWatch tool. The probability of a 50 basis point rate cut fell to 32.5% from 53.0% last week.
On Tuesday, Fed Governor Michelle Bowman signaled that she will remain cautious in her approach to any changes in policy stance. She further stated that overreacting to any data could jeopardize the progress already made. Fed Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday could offer further clues about the Fed’s plans. Mounting bets on rate cuts and the Fed’s dovish stance are likely to weaken the USD against the Swiss Franc (CHF).
The Swiss National Bank (SNB) raised its policy rate to 1.75% before starting to cut its interest rate in March. Most economists surveyed by Bloomberg anticipated a further 25 bps cut in September, while traders are betting on further easing. Meanwhile, economic uncertainty and geopolitical tensions in the Middle East could boost safe-haven flows, benefiting the Swiss Franc (CHF).
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
