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Market Analysis

USD/CHF Experiences Mild Decline Near 0.8900 Ahead of US PMI Data
Amos Simanungkalit · 6.4K Views

13

The USD/CHF pair is trading weaker around 0.8905 in early European session on Wednesday. This decline is driven by expectations of potential US Federal Reserve (Fed) rate cuts this year, which are putting downward pressure on the Greenback. Traders are looking forward to the preliminary US July S&P Global Purchasing Managers Index (PMI) for additional market direction.

The anticipation of Fed rate cuts starting in September is capping the upside for the Greenback. Market expectations include two or even three rate reductions this year, with the CME FedWatch Tool indicating a nearly 96% probability of a rate cut in September.

However, these expectations could shift depending on upcoming US economic data. Investors are hopeful for improvements in the US manufacturing sector, and stronger-than-expected PMI figures could limit the downside for USD/CHF. Key data releases this week include the US Gross Domestic Product (GDP) for Q2 on Thursday and Personal Consumption Expenditures Price Index (PCE) data for June on Friday.

Recent US data showed a 5.4% decline in Existing Home Sales in June, dropping from 4.11M to 3.89M, which was below market expectations. Additionally, the Richmond Fed Manufacturing Index fell to -17 in July from -10 previously.

The Swiss Franc (CHF) has also been pressured by expectations that the Swiss National Bank (SNB) might cut interest rates further in September. FX markets analyst Kyle Chapman from Ballinger Group anticipates a third rate cut from the SNB next quarter, with a potential fourth cut in December. Furthermore, political uncertainty in the US is adding to USD volatility and boosting safe-haven assets like the CHF.

 

 

Paraphrasing text from "FX Street" all rights reserved by the original author.

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