The USD/CHF currency pair is trading lower at around 0.8465 during the early European session on Friday, with the US Dollar facing selling pressure following the Federal Reserve’s significant interest rate cut on Wednesday. Traders are awaiting insights from Fed official Patrick Harker’s speech later today.
The Fed announced a 50 basis point cut to its key lending rate, marking the first reduction since the COVID-19 pandemic. Fed Chair Jerome Powell stated that it was time to “recalibrate our policy” in light of progress on inflation and employment, indicating a shift towards a more sustainable monetary stance. Furthermore, Fed officials signaled the possibility of an additional half-point cut before the end of the year, which may further weigh on the USD.
On the Swiss side, Switzerland reported a trade surplus of 4.578 billion Swiss Francs in August, according to the Federal Customs Office. Exports declined to 20.491 billion Francs, while imports fell to 15.912 billion Francs during the same period.
Additionally, recent military actions by Israeli forces against Hezbollah in southern Lebanon have raised geopolitical tensions. The attacks follow explosions from the militia’s communication devices, which resulted in numerous casualties. Heightened geopolitical risks could drive safe-haven flows into the Swiss Franc (CHF), providing further support for the currency against the USD.
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