The USD/CHF pair is holding steady near 0.8970 as the US Dollar gains strength on reduced expectations of a Fed rate cut in September. The Fed is expected to maintain a hawkish stance on interest rates due to strong labor market conditions, as seen in the recent NFP report.
Market sentiment has turned risk-averse with a decline in Fed rate-cut bets, leading to losses in S&P 500 futures and a jump in the US Dollar Index to a four-week high. US Treasury yields are also on the rise.
Investors will be watching the US CPI data for May and the Fed’s interest rate policy announcement on Wednesday. Core inflation is expected to have slowed to 3.5%, while headline figures are expected to grow steadily by 3.4%. The Fed is likely to keep rates unchanged for the seventh consecutive time, with a focus on their guidance on interest rates.
On the Swiss front, market expectations for the SNB’s rate-cut path will impact the Swiss Franc. The SNB is unlikely to announce a rate cut on June 20, despite inflation remaining below the 2% threshold. SNB Chairman Thomas J. Jordan has warned of small upside risks to inflation expectations, driven by the weak Swiss Franc boosting Swiss exports globally.