- USD/CHF trades with caution around 0.7920 ahead of Fed Powell’s speech at 16:35 GMT.
- Fed Miran supports lowering interest rates by roughly 2%.
- The SNB is expected to hold interest rates steady at 0% on Thursday.
The USD/CHF pair demonstrates a subdued performance around 0.7920 during the late Asian trading session on Tuesday. The Swiss Franc pair is expected to stay on the sidelines, with investors awaiting the speech from Federal Reserve (Fed) Chair Jerome Powell scheduled at 16:35 GMT.
Investors will pay close attention to Fed Powell’s speech to get cues about the pace of interest rate cuts by the United States (US) central bank in the remainder of the year.
On Monday, Federal Open Market Committee (FOMC) members St. Louis Fed President Alberto Musalem, Atlanta Fed President Raphael Bostic, and Cleveland Fed President Beth Hammack warned that the central bank needs to remain cautious over unwinding monetary policy restrictiveness further, citing persistent inflation risks. Out of three FOMC members, only Fed Musalem is the voting member.
On the contrary, newly appointed Fed Governor Stephen Miran signaled that interest rates should be reduced further by roughly two percentage points to offset risks to employment. Fed policy is very restrictive and poses risk to Fed’s employment mandate, and I believe appropriate Fed funds rate is in mid-2% area, almost 2 percentage points below current level,” Miran said.
In Tuesday’s North American session, investors will also focus on the preliminary US S&P Global Purchasing Managers’ Index (PMI) data for September, which will be published at 13:45 GMT.
This week, the Swiss Franc (CHF) will be influenced by the Swiss National Bank’s (SNB) monetary policy announcement on Thursday, in which it is expected to hold interest rates at zero level.
Investors would look for cues about whether the SNB could push interest rates into a negative territory to heat up inflation.
