Market Analysis

The USD/CHF pair gained traction around 0.8485 during Friday’s early European session, as the Swiss Franc (CHF) softened following the Swiss National Bank's (SNB) interest rate cut on Thursday. Investors are now focused on the upcoming US Personal Consumption Expenditures (PCE) Price Index data, set for release later in the day.

On Thursday, the SNB lowered its key interest rate by 25 basis points (bps), bringing it down to 1.00%, the lowest level since early 2023. Analysts at Goldman Sachs noted that the rate cut was driven by lower inflationary pressures, partly due to the strength of the CHF and other contributing factors. They anticipate another 25 bps reduction at the SNB’s December meeting, citing the central bank’s dovish stance and revised inflation forecasts.

The USD has found some support against the CHF, bolstered by stronger-than-expected US economic data on Thursday. Initial Jobless Claims for the week ending September 21 increased to 218K, slightly up from the previous week’s revised figure of 222K (previously 219K), but still below the forecasted 225K. Meanwhile, US Durable Goods Orders remained flat in August, following a sharp 9.9% rise in July, exceeding expectations of a 2.6% decline.

Despite this, dovish comments from Federal Reserve (Fed) officials and growing speculation of future Fed rate cuts may limit further USD gains. On Thursday, Fed Governor Lisa Cook expressed her full support for the Fed’s recent 50 bps rate cut, calling it a key measure to maintain "moderate" economic growth.

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