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Market Analysis

Because there is less chance of a Fed rate cut, the USD/CHF pair maintains its position above 0.8500
Amos Simanungkalit · 11.1K Views

17

The USD/CHF pair has extended its winning streak for the fourth consecutive session, currently trading around 0.8510 during Thursday's European session. This upward movement can be linked to robust US labor data, which has diminished the likelihood of the Federal Reserve implementing another aggressive rate cut in November.

The ADP US Employment Change report revealed an increase of 143,000 jobs in September, surpassing expectations of 120,000. Additionally, annual wages rose by 4.7% year-over-year. The job additions for August were also revised upward from 99,000 to 103,000. These figures suggest that the labor market is in better shape than initially thought at the beginning of the third quarter.

According to the CME FedWatch Tool, the market is pricing in a 65.9% chance of a 25 basis point rate cut by the Federal Reserve in November, with a 31.4% likelihood of a 50 basis point cut, a decrease from 49.3% just a week earlier.

On the other hand, the Swiss Franc (CHF) is facing downward pressure due to weaker-than-expected inflation data released today. Switzerland's Consumer Price Index (CPI) rose only 0.8% year-over-year in September, falling short of market expectations and down from August's 1.1%. This marks the lowest inflation rate since September 2021. Furthermore, the monthly inflation rate dropped by 0.3%, exceeding forecasts of a 0.1% decline, following a stagnant August.

Despite this downward pressure on the CHF, safe-haven demand could help support the currency amid rising tensions in the Middle East. Reports from the Israeli Broadcasting Authority (IBA) indicate that Israel's security cabinet has decided to take strong measures in response to a recent Iranian attack. Iran launched over 200 ballistic missiles and drone strikes targeting Israel on Tuesday night.

 

 

 

 

 

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

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