USD/CHF rises above 0.8450 as traders prepare for US PCE data

• USD/CHF remains in positive territory near 0.8485 in the early European session on Friday, rising 0.32% on the day.
• The SNB cut interest rates by 25 bps, taking its policy rate to 1.00% at its September meeting on Thursday.
• The Fed’s Cook said he “wholeheartedly” supported the rate cut.

The USD/CHF pair attracts some buyers around 0.8485 on Friday during the early European session. The Swiss franc (CHF) weakens after the Swiss National Bank (SNB) cut interest rates on Thursday. All eyes will be on the release of the US Personal Consumption Expenditure Price Index (PCE) data, which will be released later on Friday.

The Swiss central bank decided to cut interest rates by 25 basis points (bp), bringing its monetary policy rate to 1.00%, the lowest level since early 2023. Analysts at Goldman Sachs noted that the SNB cut on Thursday was supported by lower inflation pressure, driven by stronger CHF and other factors, and they expect a further 25 bp reduction at the December meeting, citing their dovish guidance and new inflation projections.

Better than estimated US economic data on Thursday has provided some support to the US Dollar (USD) against the CHF. US weekly Initial Jobless Claims for the week ending September 21 increased to 218K, from 222K the previous week (revised from 219K). The figure was below the initial consensus of 225K. Meanwhile, US Durable Goods Orders remained stable in August, compared with a 9.9% increase in July, stronger than the expectation of a 2.6% drop.

However, dovish comments from Federal Reserve (Fed) officials and growing bets of a Fed rate cut in the coming months could limit the USD’s upside. Fed Governor Lisa Cook said on Thursday that she “wholeheartedly” supported the central bank’s decision to cut interest rates by 50 bp, calling it an important step in maintaining the path to “moderate” economic growth. .