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USD/CHF is expected to extend its downside journey below 0.8840 as the market sentiment is bullish.
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The US Dollar Index has extended its three-day losing streak as only one interest rate hike has been left in the toolkit of the Fed.
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Apart from the US inflation data, investors will focus on the Fed’s Beige Book.
The USD/CHF pair delivered a steep decline near 0.8840 in the early European session. The Swiss Franc asset is expected to break further as market sentiment is quite bullish and demand for the US Dollar Index (DXY) is very weak.
S&P500 futures were subdued after a bullish trading session, awaiting a new trigger for the next move. c Federal Reserve (Fed), which will be announced this month. The yield on the 10-year US Treasury bond fell below 4.0%.
This week, the main trigger for the USD index will be the Consumer Price Index (CPI) data, which will be released on Wednesday at 12:30 GMT. According to preliminary reports, the monthly headline CPI posted a higher pace of 0.3% compared to the previous pace of 0.1%. Also, core inflation which excludes oil and food prices is expected to match the headline CPI pace.
Meanwhile, annual headline CPI is expected to decline to 3.1% versus the previous 4.0% release, and core inflation is seen softening to 5.0% versus May’s figure of 5.3% over the same period.
Apart from US inflation data, investors will focus on the Fed’s Beige Book, which is expected to show current economic conditions and outlook.
Absence of economic events in the Swiss franc economy will keep the spotlight on the US dollar. However, regarding the Swiss National Bank’s (SNB) interest rate guidance, analysts at MUFG believe that a further 25 bps rate hike in September is more likely than not at this stage. Another rate hike with core CPI at current levels (1.9%) or lower would take the SNB’s policy rate unchanged into positive territory in real terms – joining the RBNZ, the Fed, and the BoC.
USD/CHF
