- USD/CHF depreciates as the US Dollar struggles amid an ongoing dovish tone over the Fed policy outlook.
- Traders remain cautious ahead of President Trump’s upcoming trade deadline on Friday.
- The Swiss Franc weakened ahead of the 39% US tariff on Swiss goods, set to take effect on August 7.
USD/CHF edges lower after two days of gains, trading around 0.8070 during the Asian hours on Wednesday. The pair depreciates as the US Dollar (USD) weakens due to prevailing dovish sentiment surrounding the US Federal Reserve (Fed) policy outlook. Traders will likely observe the speeches from the Federal Reserve (Fed) policymakers later in the day, including Susan Collins, Lisa Cook, and Mary Daly.
The US Federal Reserve (Fed) is expected to deliver a 25 basis point rate cut in September, following weaker labor market data that has heightened concerns over the US economic outlook. Markets continued to reflect over a 90% probability of a Fed rate cut in September, with roughly 60 basis points of total easing expected by year-end.
Traders adopt caution ahead of US President Donald Trump’s latest trade deadline on Friday, when a fresh round of high tariffs will go into effect on multiple nations unless last-minute deals are reached to negotiate lower levies. Trump also threatened to impose tariffs of up to 250% on pharmaceutical imports and potential levies on semiconductors.
On Tuesday, Trump announced that he will appoint the Fed’s Chair and Kugler’s replacement by the end of the week. He confirmed his choices for Chairman, including White House economic adviser Kevin Hassett, former Fed governor Kevin Warsh, and two other people. Trump also confirmed that Treasury Secretary Scott Bessent is not his choice for the Fed’s Chair.
The downside of the USD/CHF pair could be restrained as the Swiss Franc (CHF) struggles due to rising concerns about the impact of US tariffs on Swiss exports. The Trump administration announced a 39% tariff on Swiss goods, an increase from the 31% rate introduced in April, taking effect on August 7.
