- USD/CHF drops sharply to 0.9000 as US Dollar slumps ahead of US Inflation data.
- S&P 500 opens on a positive note, indicating demand for risk-perceived assets.
- The SNB is expected to cut interest rates again as Swiss inflation remains below 2%.
The USD/CHF pair falls sharply to 0.9010 in Tuesday’s early New York session. The Swiss Franc asset weakens as the market sentiment remains cheerful even though traders pare bets supporting Federal Reserve (Fed) rate cuts from the June meeting. Market expectations for the Fed reducing rates ease as strong United States Nonfarm Payrolls (NFP) data strengthens the inflation outlook.
The S&P 500 opens on a positive note, exhibiting decent demand for risky assets. 10-year US Treasury yields drop to 4.37% on fears that risks to employment and inflation could be imbalanced if interest rates remain higher for a long period.
On Monday, Chicago Federal Reserve President Austan Goolsbee said the central bank must consider for how long interest rates will remain higher on Monday. Goolsbee warned that the Unemployment Rate could rise if interest rates remain high for too long.
The US Dollar Index (DXY) falls to 103.90 amid cheerful market sentiment. Going forward, investors will focus on the US consumer price inflation data for March, which will be published on Wednesday.
Monthly headline and core inflation are both forecasted to have increased at a slower pace of 0.3% from 0.4% in February. In the same period, economists expect the annual headline CPI to accelerate to 3.4% from 3.2%, while the core inflation is anticipated to decelerate to 3.7% from 3.8%. The inflation data is expected to significantly influence market expectations for Fed rate cuts.
On the Swiss Franc front, investors expect that the Swiss National Bank will cut interest rates again as inflation remains consistently below 2%. The SNB led the global rate-cut cycle as it surprisingly announced a dovish interest rate decision in the March meeting. The central bank lowered its borrowing costs by 25 basis points (bps) to 1.5%.
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 flirts with daily tops near 1.0730
The continuation of the selling pressure in the Greenback now lends further oxygen to the risk complex, encouraging EUR/USD to revisit the area of daily highs near 1.0730.
USD/JPY looks stable around 156.50 as suspicious intervention lingers
USD/JPY remains well on the defensive in the mid-156.00s albeit off daily lows, as market participants continue to digest the still-unconfirmed FX intervention by the Japanese MoF earlier in the Asian session.
Gold advances for a third consecutive day
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Week Ahead: Bitcoin could surprise investors this week Premium
Two main macroeconomic events this week could attempt to sway the crypto markets. Bitcoin (BTC), which showed strength last week, has slipped into a short-term consolidation.
Five Fundamentals for the week: Fed fears, Nonfarm Payrolls, Middle East promise an explosive week Premium
Higher inflation is set to push Fed Chair Powell and his colleagues to a hawkish decision. Nonfarm Payrolls are set to rock markets, but the ISM Services PMI released immediately afterward could steal the show.