The USD/CHF pair maintains a subdued demeanor amidst light trading activity, reflecting investor caution ahead of the Federal Reserve’s upcoming interest rate announcement scheduled for Wednesday. As of early European trading on Tuesday, the pair lingers around the 0.8950 mark.
Expectations lean towards the Federal Reserve opting to maintain interest rates within the 5.25%-5.50% range in its efforts to rein in inflation towards the targeted 2%. Market watchers are closely eyeing the US headline and core Consumer Price Index (CPI) figures for May, with projections indicating year-over-year increases of 3.4% and 3.5%, respectively.
The recent robust US jobs report for May has tempered expectations for multiple interest rate cuts by the Federal Reserve in 2024. According to the CME FedWatch Tool, the probability of a 25 basis points rate cut in September has dipped to approximately 49.0%, down from 59.5% recorded a week earlier.
Meanwhile, Switzerland’s Consumer Confidence indicator for May remained relatively steady at -38, compared to April’s -38.1, slightly undershooting forecasts of -37. Attention now shifts to the release of the Financial Stability Report by the Swiss National Bank (SNB), expected to offer insights into the stability of the banking sector and financial market infrastructure.
Despite inflation levels remaining below the 2% threshold, the Swiss National Bank (SNB) is unlikely to implement an interest rate cut in June. SNB Chairman Thomas J. Jordan had previously cautioned against significant upward risks to inflation expectations.
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