- USD/CHF strengthens as market sentiment suggests the Fed could prolong higher interest rates.
- The uptrend in US Treasury yields has bolstered the US Dollar.
- SNB’s Jordan has voiced concerns that the CHF has an adverse impact on Swiss businesses.
USD/CHF appreciates for the third consecutive day on Friday, advancing to around 0.8850 during the Asian trading hours. The strong Producer Price Index (PPI) data from the United States (US), has contributed to the strength of the USD/CHF pair.
Furthermore, the US Dollar Index (DXY) benefits from the hawkish sentiment surrounding the US Federal Reserve, contemplating maintaining its higher interest rates in response to persistent inflationary pressures. Additionally, US Treasury yields have risen for the past four consecutive sessions, lending further support to the US Dollar (USD), consequently, underpinning the USD/CHF pair.
The US Core Producer Price Index (PPI) remained stable with a 2.0% year-over-year increase in February, surpassing the expected 1.9%. The US PPI (YoY) recorded a 1.6% increase, exceeding both the anticipated 1.1% and the previous 1.0%. Furthermore, the Retail Sales Control Group showed improvement, reaching a flat 0.0% compared to the previous decline of 0.3%.
These recent economic indicators complicate the Federal Reserve's decision-making process regarding interest rate cuts. According to the CME FedWatch Tool, the likelihood of a rate cut in March currently stands at only 1.0%, dropping to 7.7% for May. The probabilities for rate cuts in June and July are relatively lower, at 59.0% and 79.4%, respectively.
In Switzerland, Producer and Import Prices decreased by 2.0% year-on-year in February 2024, showing a slight improvement from the previous month's 2.3% decline, which marked the sharpest drop since December 2020. This decline marks the tenth consecutive period of decrease. Monthly, prices increased by 0.1%, rebounding from a 0.5% fall in the previous month.
The Swiss Franc (CHF) faces challenges as the Swiss National Bank (SNB) adjusts its policy stance, no longer prioritizing a strong domestic currency. SNB Chairman Thomas Jordan has expressed concerns about the Swiss Franc's excessive strength, particularly its impact on Swiss businesses, especially exporters. These concerns are reflected in data from Switzerland's Foreign Exchange Reserves (CHFER), which show a recovery in Forex reserves.
(This story was corrected on March 15 at 11:21 GMT to say, in the first bullet point, that the pair is USD/CHF, not USD/CAD.)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.