USD/CHF edges higher as traders brace for SNB interest rate decision

USD/CHF adds nominal gains as the Swiss Franc is weighed down by uncertainty ahead of the SNB’s policy decision.
The SNB is expected to cut interest rates for the third straight time.
Growing expectations for Fed large rate cuts in November keep the US Dollar under pressure.

Sagar Dua FXStreet

The USD/CHF pair is marginally higher to near 0.8480 in Tuesday’s European session. The Swiss Franc asset edges higher as the Swiss Franc (CHF) weakens amid uncertainty ahead of the Swiss National Bank’s (SNB) interest rate decision, which will be announced on Thursday.

The SNB is widely anticipated to cut interest rates by 25 basis points (bps) to 1%. This would be the third straight quarter-to-a-percentage rate cut as inflation in the Swiss economy has been sustained below the bank’s target of 2% since June 2023. In August, the annual Consumer Price Index (CPI) decelerated further to 1.1%, the lowest from April of this year.

Meanwhile, the Swiss Franc asset gains despite the US Dollar (USD) retreats as growing concerns over the United States (US) job growth have stoked market expectations for second straight Federal Reserve (Fed) 50 bps interest rate cut in the November meeting. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, declines to 100.80.

“The Federal Reserve to cut rates by another 50 basis points in November, a decision that will largely depend on incoming data, especially the next monthly jobs report,” according to strategists from Citi.

Later this week, investors will pay close attention to the US Personal Consumption Expenditure Price Index (PCE) for August, which will be published on Friday. The US core PCE inflation, a Fed’s preferred inflation gauge, is estimated to have accelerated to 2.7% from 2.6% in July.

Economic Indicator

SNB Interest Rate Decision

The Swiss National Bank (SNB) announces its interest rate decision after each of the Bank’s four scheduled annual meetings, one per quarter. Generally, if the SNB is hawkish about the inflation outlook of the economy and raises interest rates, it is bullish for the Swiss Franc (CHF). Likewise, if the SNB has a dovish view on the economy and keeps interest rates unchanged, or cuts them, it is usually bearish for CHF.

EUR/USD looks sidelined around 1.1850

EUR/USD remains on the back foot, extending its bearish tone and sliding towards the 1.1850 area to print fresh daily lows on Monday. The move lower comes as the US Dollar gathers modest traction, with thin liquidity and subdued volatility amplifying price swings amid the US market holiday.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

Gold battle around $5,000 continues

Gold is giving back part of Friday’s sharp rebound, deflating below the key $5,000 mark per troy ounce as the new week gets underway. Modest gains in the US Dollar are keeping the metal in check, while thin trading conditions, due to the Presidents Day holiday in the US, are adding to the choppy and hesitant tone across markets.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.