USD/CHF remains under pressure in Wednesday’s Asian session, hovering around 0.7860 — its weakest level since 2010. The pair extended losses after Tuesday’s sharp slide, driven by growing conviction that the Federal Reserve (Fed) will cut interest rates later today.
According to the CME FedWatch tool, markets are fully pricing in a 25 basis point reduction when the Fed delivers its policy decision at 18:00 GMT. The US Dollar Index (DXY), which tracks the greenback against six major peers, is holding near a two-month low at 96.60.
Fed in focus as labor market weakens
Expectations for Fed easing have strengthened following downside risks in the US labor market. Earlier this month, benchmark revisions to Nonfarm Payrolls revealed that 919,000 fewer jobs were created than initially estimated. Investors will be watching the Fed’s updated economic projections, particularly on rates, inflation, and employment, for clues on the path ahead.
Markets are also looking for guidance on whether tariffs could still exert upward pressure on prices, a factor that may influence the central bank’s stance.
Swiss inflation pressures ease
In Switzerland, softening inflation is reinforcing the case for looser monetary conditions. Data released Monday showed Producer and Import Prices falling 0.6% month-on-month in August, a steeper decline than July’s 0.2% drop. The figures marked the fourth consecutive monthly contraction, pointing to weakening household demand and raising the prospect of rates sliding deeper into negative territory.
