USD/CHF trades around 0.8630, recovers recent losses due to less dovish Fed

• USD/CHF rises as strong US jobs and inflation data have decreased the likelihood of significant rate cuts by the Fed.
• Atlanta Fed President Raphael Bostic expects only one additional 25 basis point rate cut this year.
• The Swiss franc strengthened as lower inflation in September reduced the need for the SNB to implement substantial rate cuts.

USD/CHF reverses its recent losses recorded in the previous session, trading around 0.8630 during the early European hours on Wednesday. The US Dollar (USD) continues to gain support as strong US employment and Consumer Price Index (CPI) data have tempered expectations for aggressive easing from the Federal Reserve (Fed).

Markets now anticipate a total of 125 basis points in rate cuts over the next 12 months. According to the CME FedWatch tool, there is currently a 94.1% chance of a 25 basis point rate cut in November, with no expectation of a reduction greater than 50 basis points.

On Tuesday, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, indicated he expects only one additional 25 basis point rate cut this year, in line with his projections from last month’s U.S. central bank meeting. “The median forecast pointed to a total of 50 basis points in cuts, on top of the 50 basis points already implemented in September,” according to Reuters.

On the Swiss side, the 10-year government bond yield eased to 0.41% as traders assess the broader economic and financial environment in Switzerland. Bond yields typically reflect inflation expectations. Low inflation typically strengthens the currency by preserving its purchasing power, meaning the Swiss Franc (CHF) could find support even as bond yields decline.