Usdchf Weak Before Fedspeak

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Usdchf Weak Before Fedspeak

Usd/Chf Trades Near 0.8900, All Eyes On Fedspeak

The USD/CHF pair is seen trading around 0.8920, only a few pips above the 0.8900 support zone on Wednesday. It seems that the USD/CHF pair is under the influence of renewed US Demand, mainly driven by improved bond yields.

According to Dr. Adriana Kugler from the Federal Reserve, the inflation in the USA has eased as of late. However, he also repeated the same rhetoric of how they need more data to confirm this view and to justify an interest rate cut.

Dr. Kugler also commented on how if the upcoming data doesn't provide evidence that inflation is going down, it will further delay the rate cuts. In a sense, the next few CPI and the NFP report releases will decide whether we get a rate cut on September or we will have to wait till December.

Swiss 10-Year Bonds Hover At 0.54%

The key focus of the market is now on the upcoming US economic data and especially the Fed's Beige book. After that, we also had Fedspeak from Waller and Barkin, key officials from the central bank. If we look at the Swiss side, the trade balance is due tomorrow.

Another noteworthy development is from Switzerland's 10-year bond yields, which have gone down to 0.54%. This is one of the lowest levels and was only last seen in August 2022. On the US side, a similar trend is seen in the US bond yields as well.

On Monday, Fed Powell added that the recent data provided them with confidence, but only to some extent. He commented on how inflation is slowly progressing towards the central bank's target, which also means a rate cut is forthcoming.

Recently, the SNB (Swiss National Bank) has also lowered the policy rate by 25 bps. This decision was taken on account of a stronger CHF and a weaker inflation print.

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