Usdchf Retraces Ahead Of Fomc

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Usdchf Retraces Ahead Of Fomc

Usd/Chf Retraces To 0.8450 Ahead Of Fomc

USD/CHF is trading near 0.8450 and erased most of its recent gains on Wednesday. It seems that the US Dollar is facing a challenging environment as the Fed is likely to announce a 50 bps rate cut later today.

According to the CME FedWatch tool, the chances of a 25 bps rate cut are 33%, while a 50 bps rate cut has a higher chance of 67%. Just a day ago, the odds were only standing at 62%, which means they have increased a lot over a span of one day.

Us Retail Sales In August Remain Strong

Yesterday, the JP Morgan CEO offered his insights on whether the Fed will cut the rates by 25 or 50 bps. According to him, the impact of the Fed's decision will not be earth-shattering at all. In fact, he added that any changes to the rate will be minor when we look at the bigger picture.

He also talked about how there's a real US economy that is still operating and is not that dependent on the modifications of the monetary policy by the Fed.

The US Retail Sales data was released on Tuesday which showed a 0.1% m/m increase in August. The July's reading was also revised to 1.1% growth.

Over all, the August's Retail Sales were above the expectations and shows that the US consumer spending remains resilient.

If we look at Switzerland's side, the focus is on the Swiss Trade Balance, which will be released on Thursday. The report will provide us a first-hand look at the health of the Swiss economy. Also, the CHF is on the front foot based on speculations that the SNB will be the first one to deliver a big rate cut in 2024.

According to economists, the SNB is highly likely to cut the policy rate by 25 bps in September 2024. Meanwhile, it seems that the Federal Reserve is now also on the same path as the rest of the world in regard to policy easing.

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