The USD/CHF pair edged higher on Friday, trading around 0.8025 in early European hours as the US dollar gained modest ground ahead of the United States Personal Consumption Expenditure (PCE) Price Index release for July, scheduled at 12:30 GMT.
At the same time, the US Dollar Index (DXY), which measures the greenback against six major peers, hovered near 98.00, offering additional support to USD/CHF.
Focus on core PCE and Fed policy outlook
Markets are closely watching the core PCE inflation print, a gauge that strips out volatile food and energy prices and is closely followed by the Federal Open Market Committee (FOMC). Consensus expectations point to a year-on-year rise of 2.9% in July, slightly above June’s 2.8%. On a monthly basis, core inflation is projected to increase by 0.3%, matching the pace of recent months.
The data is expected to shape the Federal Reserve’s policy outlook, with traders pricing in an 85% probability that the Fed will cut rates by 25 basis points (bps) to a range of 4.00%–4.25% at its September meeting, according to the CME FedWatch tool.
Swiss economy shows signs of cooling
Meanwhile, Switzerland’s latest economic data highlighted sluggish growth. GDP expanded just 0.1% in the second quarter, in line with expectations but slower than the 0.4% growth recorded in Q1. The weaker performance could give the Swiss National Bank (SNB) further reason to maintain its ultra-loose monetary stance.
Market outlook
With USD/CHF holding slightly higher ahead of US PCE data, the pair’s next move will hinge on whether inflation surprises to the upside or downside, setting the tone for the Fed’s September policy decision.
