- USD/CHF softens to near 0.8055 in Wednesday’s Asian session.
- Markets expect the Fed to leave the interest rate unchanged at its July meeting.
- US economic growth is estimated to have rebounded in the second quarter.
The USD/CHF pair trades in negative territory around 0.8055 during the early European session on Wednesday. Markets turn cautious ahead of the US Federal Reserve (Fed) interest rate decision and the US tariff deadline.
The Fed is anticipated to leave interest rates unchanged at its policy meeting later on Wednesday, though it could see a rare dissent by some Fed officials in favor of lower borrowing costs. Investors are already pricing in the odds of a rate cut in September at more than 60%, according to pricing in federal funds futures contracts.
“With labor market conditions near full employment, most Fed officials want to wait and see how tariffs impact inflation,” said Tom Kenny, senior international economist at ANZ in Sydney.
The Greenback edges lower after trade talks between the US and China ended without any substantive agreement. US Treasury Secretary Scott Bessent said that the US and China will continue talks over maintaining a tariff truce before the deadline in two weeks, and Trump will make the final decision on any extension. Any signs of escalating trade tensions could boost the safe-haven demand, supporting the Swiss Franc.
Traders will also keep an eye on the preliminary reading of the US Gross Domestic Product (GDP) report. The US economy is expected to grow at an annual rate of 2.4% in the second quarter (Q2), compared to a contraction of 0.5% in Q1. In case of a stronger-than-expected outcome, this could help limit the USD’s losses in the near term.
