USD/CHF remains under pressure for a second consecutive session, trading near the 0.7900 mark during Asian hours on Tuesday. Market participants are positioning cautiously ahead of the Swiss ZEW Expectations survey for December, due later in the day, which could provide fresh insight into business sentiment and labor market conditions and, in turn, influence expectations around the Swiss National Bank’s (SNB) policy outlook.
Focus shifts to key US data
Attention will later turn to a heavy US data calendar during the North American session. Traders are awaiting the annualized US Gross Domestic Product (GDP) reading for the third quarter, which is expected to show growth of 3.2%, easing from the 3.8% expansion recorded in Q2.
In addition, the US ADP Employment Change four-week average and Q3 Core Personal Consumption Expenditures (PCE) data are likely to shape near-term expectations for Federal Reserve policy.
USD pressured by easing expectations
The pair’s downside is largely driven by renewed weakness in the US Dollar, as markets price in increasing odds that the Federal Reserve will continue its easing cycle. Fed Governor Stephen Miran said on Monday that recent economic data aligns with his outlook and that he does not anticipate a near-term recession, while cautioning that a failure to ease policy could heighten recession risks.
Fed signals remain mixed
Despite growing expectations for further easing, Federal Reserve officials remain divided on the appropriate policy path. Cleveland Fed President Beth Hammack noted on Sunday that monetary policy is currently well positioned to pause, allowing policymakers to assess the impact of the cumulative 75-basis-point rate cuts on the economy during the first quarter.
This divergence in Fed messaging continues to add uncertainty to the US Dollar outlook, keeping USD/CHF biased to the downside ahead of key macro releases.
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