Usdchf Turns Higher

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Usdchf Turns Higher

Usd/Chf Turns Higher To 0.9070 On Soft Swiss Cpi

The USD/CHF maintained a bullish tone on Thursday and touched a high of 0.9070. The recent CPI print from Switzerland was weaker than expected, which has increased the chances of more rate cuts by the SNB.

If we look at other developed economies, the only rate exception is SNB, which has gone ahead with a rate cut of 25 bps in March. As of now, the borrowing rate in Switzerland is at 1.5%.

According to Switzerland's statistical office, the monthly CPI shows a stagnation of price inflation while the investors were forecasting a +0.3% change.

During February, CPI showed an increase of 0.6%, while the annual inflation rate showed a slow growth of 1% only. According to economists, the CPI in Switzerland was expected to grow by 1.3%!

Elsewhere, the US appears to have gone soft after the services PMI release. The data painted a weaker economic outlook for the USA, which has sent the DXY lower. For now, the DXY is fiddling near the 104.12 handle with a bearish overtone.

ISM, or Institute of Supply Management, has reported a change in the services PMI from 52.6 to around 51.4. Furthermore, the PMI reading was also lower than the expected reading of 52.7.

Looking ahead, the markets are now looking for a new impetus, as even the NFP has given mixed signals. While the job growth is very strong, the wage growth tells a different story.

As a result, the odds of rate cuts from Fed have gone down but it is still above the 50% threshold which means there's still a good chance of rate cut in the next 2-3 months.

The overall picture of the USD/CHF tells us the SNB may go with a rate hike in the wake of rising inflation while the Fed may resort to a rate cut. Against this backdrop, the most favorable direction for the USD/CHF in the next 1-2 months is towards the downside.

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