The USD/CHF pair is trading broadly steady around 0.7920 in the late Asian session on Tuesday, with the Swiss franc consolidating as the US dollar wavers after Federal Reserve (Fed) Chair Jerome Powell signaled caution on rate cuts amid rising risks to the central bank’s dual mandate. The US Dollar Index (DXY), which measures the greenback against a basket of six major currencies, is holding firm near 97.35 at press time.
Powell urges caution on easing policy
Speaking on Tuesday, Fed Chair Powell emphasized the need for prudence in loosening monetary policy, warning that “near-term risks to inflation are tilted to the upside and risks to employment to the downside.” His comments underscored the Fed’s reluctance to commit to an accelerated path of rate cuts despite softer economic signals.
In contrast, Fed Governor Michelle Bowman adopted a more dovish stance, stressing that the central bank risks falling behind the curve on labor market weakness. Bowman argued that “it’s a lot easier to support the labor market by lowering the federal funds rate than it is to fix it after it’s broken.”
Upcoming US data in focus
Looking ahead, investors will turn their attention to Thursday’s release of US Durable Goods Orders for August. The data is expected to show a moderate 0.5% decline, following previous contractions, which may provide further clues about the resilience of US manufacturing and demand.
SNB decision eyed this week
Meanwhile, market participants are also awaiting the Swiss National Bank’s (SNB) policy announcement on Thursday. The central bank is widely expected to keep rates unchanged at zero as inflation remains subdued. Traders will watch closely for any guidance on the possibility of negative interest rates in the near term.
Earlier this month, SNB Chairman Martin Schlegel highlighted the drawbacks of such a policy shift, warning that negative rates could pose “undesirable side effects for savers and pension funds.”
