USD/CHF Rises Above 0.8450 as Traders Anticipate US PCE Data

The USD/CHF pair gained traction on Friday, climbing to around 0.8485 during the early European session. This move comes as the Swiss Franc (CHF) weakens, following the Swiss National Bank’s (SNB) decision to lower interest rates on Thursday. Traders are now focused on the upcoming release of the US Personal Consumption Expenditures (PCE) Price Index, scheduled for later in the day.

The SNB reduced its interest rate by 25 basis points (bps), bringing the policy rate down to 1.00%, marking the lowest level since early 2023. Analysts at Goldman Sachs explained that the SNB’s rate cut was influenced by reduced inflationary pressures, largely due to a stronger CHF and other factors. They also predict an additional 25 bps cut in December, pointing to the bank’s dovish stance and updated inflation projections.

On the US side, better-than-expected economic data on Thursday has bolstered the US Dollar (USD) against the CHF. Initial Jobless Claims for the week ending September 21 increased to 218K from the previous week’s revised figure of 222K (originally 219K). This was below the expected 225K. Additionally, US Durable Goods Orders remained flat in August, following a 9.9% increase in July, outperforming the anticipated 2.6% decline.

However, dovish comments from Federal Reserve (Fed) officials and growing expectations of future Fed rate cuts could limit the USD’s gains. Fed Governor Lisa Cook expressed strong support for the Fed’s recent 50 bps rate cut, describing it as a key step towards maintaining “moderate” economic growth.