In the early European session on Monday, the USD/CHF pair rebounded near 0.8955, ending a two-day losing streak. The stronger US Dollar provided some support to the pair. Market participants are keeping an eye on the Swiss Producer and Import Prices for June, the NY Empire State Manufacturing Index for July, and a speech by the Fed’s Mary Daly later in the day.
US producer prices rose more than expected in June, driven by a rise in service costs, which boosted the Greenback against the CHF. Despite the increase in wholesale inflation, expectations for a Fed rate cut in September remain unchanged. Market pricing indicates a high probability of a rate cut next month, with recent soft US consumer inflation data supporting this view.
Political uncertainty, such as the recent assassination attempt on former US President Donald Trump, may lead to safe-haven flows benefiting the Swiss Franc against the USD. The Swiss Franc is considered a safe-haven asset due to Switzerland’s stable economy, strong export sector, and neutral political stance.
The Swiss National Bank meets quarterly to decide on monetary policy, aiming for an annual inflation rate below 2%. Economic data releases in Switzerland play a key role in assessing the state of the economy and influencing the Swiss Franc’s valuation. Switzerland’s close economic ties to the Eurozone also impact the CHF’s performance, with the currency often moving in correlation with the Euro.