- USD/CHF encounters challenges amid renewed expectations for rate cuts by the Fed in 2024.
- Fed is anticipated to execute its initial rate cut in September, against the earlier forecasts in November.
- SNB Chairman Thomas Jordan may offer fresh cues on policy stance during the BIS Innovation Summit 2024.
USD/CHF continues its losing streak for the fourth successive day on Monday, trading around 0.9050 during the European hours. The weaker US Dollar (USD) puts pressure on the USD/CHF pair, which could be attributed to the revived expectations for potential interest rate cuts by the US Federal Reserve (Fed) later this year. This sentiment is derived from the softer-than-expected US jobs data released on Friday.
On Friday, US Nonfarm Payrolls data showed that the United States (US) economy added 175,000 new jobs in April, falling short of the estimated 243,000 and indicating a notable deceleration from March’s addition of 315,000 jobs. Additionally, Average Hourly Earnings (YoY) rose by 3.9% in April, slightly below the anticipated 4.0% and the 4.1% prior. Meanwhile, monthly growth stood at 0.2%, compared to the expected 0.3%.
The Federal Reserve (Fed) is expected to implement its first rate cut in September, diverging from previous forecasts indicating November. According to the CME FedWatch Tool, the probability of a 25 basis points (bps) rate reduction by the Fed during September’s meeting has increased to 48.8%, up from 43.8% just a week ago.
On the Swiss side, data released on Thursday showed that annual inflation in Switzerland accelerated more rapidly than expected in April. The Swiss Consumer Price Index (CPI) inflation rose to 1.4% year-on-year in April from a previous increase of 1.0% in March, surpassing the market consensus of 1.1%. This unexpected acceleration has lent support to the Swiss Franc (CHF).
Looking ahead to Monday, traders are anticipated to closely monitor a speech by Swiss National Bank (SNB) Chairman Thomas Jordan at the SNB’s Project Helvetia III during the BIS Innovation Summit 2024 in Basel. Jordan’s remarks may offer fresh insights into the economy and policy direction.
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