- USD/CHF holds onto gains near 0.8070 as the US Dollar gains after hot US PPI data for July.
- US producer inflation grew at the fastest pace in three years due to tariffs.
- Cooling Swiss PPI could force the SNB to push interest rates into negative territory.
The USD/CHF pair trades firmly near Thursday’s high around 0.8070 during the Asian trading session on Friday. The Swiss Franc pair gained sharply the previous day as the US Dollar (USD) attracted bids after the United States (US) Producer Price Index (PPI) report for July showed that prices of goods and services rose at the fastest pace in three years at the wholesale level.
During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, demonstrates strength near Thursday’s high, slightly above 98.00.
According to the report, the headline and the core PPI rose by 0.9% after remaining flat in June. On year, the headline and the core PPI grew by 3.3% and 3.7%, respectively.
Market experts believe a significant rise in producer inflation suggests that business owners have started passing the impact of tariffs to end consumers.
The sudden impact has come as inventories built by importers before the announcement of reciprocal tariffs have started replenishing. Additionally, firms are reluctant to offset the entire impact of additional duties through their profit margins.
In spite of the hot US PPI signaling a broad-based pick in inflation in the near-term, traders remain confident that the Federal Reserve (Fed) will reduce interest rates in the September monetary policy meeting.
In the Swiss region, the continuous decline in prices of goods and services at the producer level is paving the way for the Swiss National Bank’s (SNB) interest rates to enter a negative territory. The data showed on Thursday that Producer and Import Prices data declined by 0.9% in July, faster than 0.7% in June.
