USD/CHF edges up above 0.8050 as Swiss CPI disappoints

The US Dollar crawls into session. highs above 0.8050 against the Swiss Franc.
A further contraction in Swiss CPI added pressure on the CHF.
Deflationary pressures and soft economic data keep pressure on the SNB to cut interest rates further.

Guillermo Alcala FXStreet

The US Dollar has ticked up to session highs, right above 0.8050, on Monday's early European session, extending gains for the fourth consecutive day. The Swiss Franc's weakness has provided additional support for an already buoyant Greenback, as the Swiss Consumer Prices Index (CPI) data revealed stronger-than-expected deflationary pressures in October.

Consumer inflation contracted at a 0.3% pace last month, following a -0.2% reading in September, against market expectations of a mild improvement to -0.1%. Likewise, yearly inflation eased to 0.1% from 0.2% in the previous month, undershooting the market consensus of an acceleration to 0.3%.

SNB is pressured to cut rates into negative levels

The disinflationary figures keep pressure on the Swiss National Bank (SNB) to cut rates further below the current 0% level. SNB President, Martin Schlegel, has been reluctant to accept that possibility, but the growing deflationary pressures and the soft economic momentum amid the steep US tariffs are pointing in that direction.

The US Federal Reserve (Fed), cut interest rates last week, but Chairman Jerome Powell warned that a December rate cut is far from a done deal, which has triggered some monetary policy divergence with the SNB, which is underpinning support for the Greenback.

Investors will be observing US private data this week to confirm those views with manufacturing data in focus today. US S&P Global Manufacturing PMI is expected to corroborate that business activity in the sector improved to 52.2 in October, from 52.0 in September. The US ISM PMI, however, is forecast to reveal further contraction, with the PMI little changed, –49.2 from the previous month's 49.1 level– and with the prices subindex showing increasing inflationary pressures; 62.6 in October, from 61.9 in September.

Economic Indicator

Consumer Price Index (MoM)

The Consumer Price Index (CPI), released by the Swiss Federal Statistical Office on a monthly basis, measures the change in prices of goods and services which are representative of the private households’ consumption in Switzerland. The CPI is the main indicator to measure inflation and changes in purchasing trends. The MoM figure compares the prices of goods in the reference month to the previous month. Generally, a high reading is seen as bullish for the Swiss Franc (CHF), while a low reading is seen as bearish.

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by the Swiss Federal Statistical Office on a monthly basis, measures the change in prices of goods and services which are representative of the private households’ consumption in Switzerland. The CPI is the main indicator to measure inflation and changes in purchasing trends. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Swiss Franc (CHF), while a low reading is seen as bearish.

EUR/USD stays well offered below 1.1800

The selling pressure on EUR/USD is picking up pace, with the pair slipping decisively below the key 1.1800 level and sliding to fresh two week lows as Wednesday’s session draws to a close. The move lower comes as the US Dollar finds renewed strength after the latest round of US data and the release of the FOMC Minutes. Next of note on the docket will be the US weekly Initial Jobless Claims.

GBP/USD reaches multi-day lows near 1.3500

GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Australia unemployment rate set to edge up within overall strong labor market

The Australian monthly employment report is scheduled for release on Thursday at 00:30 GMT, and market participants anticipate a modest increase in jobs in January. The Australian Bureau of Statistics is expected to announce that the country added 20K new jobs in the month, while the Unemployment Rate is forecast at 4.2%, up from the 4.1% posted in December.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.