USD/CHF nudges up above 0.8050 following soft Swiss CPI data

The US Dollar advances past 0.8050 but remains trapped within recent ranges.
The Unexpected contraction of the monthly Swiss CPI keeps hopes of SNB rate cuts alive.
Weak US labour data has boosted hopes of Fed easing and is weighing on US Dollar rallies.

Guillermo Alcala FXStreet

The US Dollar is crawling higher against a somewhat weaker Swiss Franc, as the unexpected contraction in Switzerland’s consumer prices in August feeds speculation that the SNB will cut rates into negative levels over the coming months.

The pair is crawling higher from Wednesday’s lows at 0.8025, but remains trapped within a tight range below the 0.8060-0.8070 area. Investors are wary of placing large Dollar bets ahead of key US fundamental releases.

Switzerland’s inflation has remained steady, growing at a 0.2% yearly rate in August, unchanged from the previous month. Monthly inflation, however, contracted 0.1%, for the first time since January, against expectations of a flat reading.

Soft US data boosts hopes of Fed cuts

In the US, the JOLTS Job Openings report disappointed on Wednesday, showing its worst performance in the last 10 months and increasing pressure on the Federal Reserve to lower interest rates in the near term.

Fed Governor Christoper Waller and Atlanta Fed chief Raphael Bostic supported those views on Wednesday, hinting at a rate cut in September and, probably more to come in 2025, which is keeping the US Dollar's upside attempts limited.

The market is now awaiting the US ADP Employment and the ISM Services PMI for further insight into the momentum of the US economy. The highlight of the week, however, is Friday’s Nonfarm Payrolls report, which might confirm market hopes of a 25 bps rate cut at September’s Fed meeting.

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 trims gains, back below 1.1800

EUR/USD now loses some upside momentum, returning to the area below the 1.1800 support as the Greenback manages to regain some composure following the SCOTUS-led pullback earlier in the session.

GBP/USD off highs, recedes to the sub-1.3500 area

Following earlier highs north of 1.3500 the figure, GBP/USD now faces some renewed downside pressure, revisiting the 1.3490 zone as the US Dollar manages to regain some upside impulse in the latter part of the NA session on Friday.

Gold climbs to weekly tops, approaches $5,100/oz

Gold keeps the bid tone well in place at the end of the week, now hitting fresh weekly highs and retargeting the key $5,100 mark per troy ounce. The move higher in the yellow metal comes in response to ongoing geopolitical tensions in the Middle East and modest losses in the US Dollar.