• USD/CHF depreciates as a Reuters poll indicates that the Fed will hold interest rates steady through year-end.
• Strong US jobs data has traders pricing in over a 60% chance of a rate hike.
• Safe-haven demand and tighter monetary expectations strengthen the Swiss Franc.

USD/CHF loses ground after registering gains in the previous day, trading around 0.8090 during the Asian hours on Thursday. The pair depreciates as the US Dollar (USD) falls following a Reuters poll, in which the majority of economists said the Federal Reserve (Fed) will likely hold its interest rate steady at its September 15-16 meeting and for the rest of this year, once again defying market expectations for a series of hikes.

Economic data have mostly come in strong in recent weeks, and several economists noted that the August Consumer Price Index data will be crucial for solidifying their outlook on future interest rates.

Market participants are closely watching the upcoming US Producer Price Index data due to be released on Thursday and Consumer Price Index data on Friday, as these inflation reports could provide vital hints regarding the Federal Reserve’s (Fed) monetary policy outlook ahead of its meeting next week.

Following recent stronger US jobs data, traders have increased their bets on an interest rate hike, with the CME FedWatch Tool pricing in over 60% odds for a rate increase at the central bank’s upcoming policy meeting.

The USD/CHF pair depreciates as the Swiss Franc (CHF) receives strong support from the rising prospect of tighter monetary policy and higher inflation from major central banks, alongside continued safe-haven demand.

Although Swiss inflation doubled in August to 0.8%, the impact of higher energy prices is expected to be temporary, with electricity prices set to fall by around 4% from next year. Meanwhile, quarterly economic growth was confirmed at a five-year high of 1.5%. On the monetary policy front, a Swiss Bankers Association survey showed that all bankers expect the Swiss National Bank to keep its policy rate at 0% by the end of the year.

USD/CHF seen confined to recent range

Strategists at UOB Group maintain a neutral medium-term stance on USD/CHF, reiterating that they “continue to hold the same view as yesterday (07 Sep, spot at 0.8100).” For now, they “expect USD to trade in a range between 0.8055 and 0.8155,” a configuration that aligns with their broader assessment of largely directionless price action and a preference for consolidation over the next one to three weeks.