- USD/CHF could gain ground as the SNB is widely expected to deliver a 25 basis point rate cut on Thursday.
- Market participants estimate a 63% probability of a quarter-point cut by the SNB.
- The CME FedWatch tool suggests about a 50% chance of a total of 75 basis points of rate cuts by the Fed in 2024.
The USD/CHF is holding around 0.8500 during the Asian session on Thursday, holding its ground following recent gains on Wednesday. The Swiss Franc (CHF) could come under downward pressure ahead of the Swiss National Bank (SNB) interest rate decision scheduled for later in the day.
The Swiss National Bank is widely expected to deliver a 25 basis point interest rate cut at its next meeting in September. Interest rate probabilities suggest that market participants value a 63% chance of a quarter-percentage point cut by the SNB, while for a larger one, the odds are 37%.
On Wednesday, the Swiss ZEW Survey Expectations fell 5.4 points from the previous month, recording a reading of -8.8 in September, compared with a previous reading of -3.4. UBS, which partners with the CFA Society Switzerland to publish the indicator, said the negative reading indicates growing pessimism among respondents about the growth prospects of the Swiss economy over the next six months.
The upside of the USD/CHF pair could be limited by the weakness of the US Dollar (USD). The Dollar is under downward pressure from the increasing likelihood of further interest rate cuts by the US Federal Reserve (Fed) at the upcoming monetary policy meetings. According to the CME FedWatch tool, markets are pricing in a roughly 50% chance of a total of 75 basis points being discounted by the Fed to a range of 4.0-4.25% by the end of this year.
Federal Reserve Governor Adriana Kugler said Wednesday that she “strongly supported” the Fed’s decision to cut interest rates by half a point last week. Kugler also said that additional rate cuts will be appropriate if inflation continues to decline as expected, according to Bloomberg.
Traders are likely to watch the release of final US annualized gross domestic product (GDP) for the second quarter (Q2) scheduled for release later in the North American session.
Economic indicator
SNB interest rate decision
He Swiss National Bank The Bank administers the country’s monetary policy as an independent central bank. It is bound by its constitution and by statute to act in the country’s best interests. Its primary objective is to ensure price stability while taking into account economic growth. To achieve this, the Bank must create an appropriate environment for the conduct of economic activity.
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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.
