The USD/CHF pair has been trending lower for the second consecutive session, hovering around 0.9060 during Asian trading hours on Wednesday. This decline can be attributed to a weaker US Dollar and lower US yields, with investors largely ignoring the higher-than-expected US Producer Price Index data for April. The focus now shifts to the upcoming Consumer Price Index report set to be released on Wednesday.
In the US, the Producer Price Index (PPI) for April showed a 0.5% month-over-month increase, surpassing market expectations of a 0.3% rise. This rebound in producer prices comes after a slight contraction in March. The Core PPI, which excludes volatile food and energy prices, also saw a 0.5% month-over-month increase, exceeding projections.
Federal Reserve Chair Jerome Powell shared his insights following the release of the US PPI data, expressing concerns about a sustained decrease in inflation and a less optimistic view on the disinflation outlook. Powell also noted that GDP growth is expected to reach 2% or higher, citing the strength of the labor market as a contributing factor.
In Switzerland, Producer and Import Prices dropped by 1.8% year-over-year in April, showing a slight improvement from the previous decline of 2.1%. This marks the twelfth consecutive period of decrease, albeit at a slower rate compared to previous months. On a monthly basis, consumer price inflation increased by 0.6% in April, following a 0.1% rise in the previous month.
Traders are now eagerly awaiting the Industrial Production (YoY) report for the first quarter, scheduled for release on Friday. This report will provide valuable insights into the volume of production across various industries such as factories and manufacturing in Switzerland.