The USD/CHF pair maintained its gains in Friday’s late Asian session, hovering near a fresh monthly high around 0.8070 reached on Thursday. The Swiss Franc remains under pressure as the US Dollar (USD) extends its rally, supported by persistent expectations that the Federal Reserve (Fed) will deliver further rate cuts later this year.
At the time of writing, the US Dollar Index (DXY), which tracks the Greenback against six major currencies, holds near a two-month high of 99.50 posted on Thursday.
Fed rate cut expectations remain elevated
According to the CME FedWatch Tool, markets currently assign an 81.5% probability to a 25-basis-point Fed rate cut at each of the remaining two monetary policy meetings this year.
Dovish bets on the Fed remain strong as recent commentary from FOMC members highlighted concerns over downside labor market risks, while noting that consumer inflation expectations remain anchored. On Thursday, New York Fed President John Williams flagged risks in the labor market, noting that companies are hesitant to hire, reinforcing the case for additional rate cuts, according to The New York Times.
Market focus: US sentiment and Swiss inflation
Investors will monitor the preliminary University of Michigan Consumer Sentiment Index and Consumer Inflation Expectations for October, due at 14:00 GMT, for further guidance on the USD’s near-term trajectory.
On the Swiss side, rising expectations for inflation in the coming quarters are reducing concerns that the Swiss National Bank (SNB) might push rates into negative territory. SNB Chairman Martin Schlegel recently indicated that consumer inflation could accelerate, supporting a relatively neutral SNB stance and limiting downside pressure on the Swiss Franc.
