- USD/CHF struggles to gain ground as the US Dollar underperforms amid firm Fed’s interest rate cut bets.
- The US core CPI grew at a faster pace of 3.1% in July.
- Swiss inflation rose 0.2% on year in July.
The USD/CHF pair trades with caution around 0.8060 during the late Asian session on Wednesday. The Swiss Franc pair is under pressure as the US Dollar (USD) has been battered by accelerated expectations that the Federal Reserve (Fed) could resume its monetary expansion cycle from the September meeting.
At the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades cautiously near the two-week low around 98.00.
According to the CME FedWatch tool, the probability of the fed to cut interest rates in the September meeting has increased to 94% from almost 86% recorded on Monday.
Traders raise Fed dovish bets as the US CPI report didn’t show any signs of a significant pass-through of tariff-impact into prices. However, price pressures rose almost in-line with expectations. The headline inflation grew at a steady pace of 2.7% on year, slower than expectations of 2.8%. While, the core CPI – which excludes volatile food and energy items – rose at a faster pace of 3.1%, compared to expectations of 3% and the prior reading of 2.9%.
Meanwhile, traders look fresh cues about whether the Swiss National Bank (SNB) will push interest rates to the negative territory in the policy meeting next month. In the Swiss economy, inflation has remained well-below the SNB’s tolerance rate of 2%. Swiss CPI report showed last week that price pressures rose at an annual pace of 0.2%, faster than expectations and the prior reading of 0.1%.
