- USD/CHF rises to approximately 0.8575 in the early European session on Wednesday.
- Diminished expectations for a significant Fed rate cut in November bolster the USD ahead of the FOMC Minutes.
- Growing geopolitical tensions in the Middle East may limit the pair's upside potential.
The USD/CHF pair is trading at a stronger level around 0.8575 during the early European session on Wednesday. The firmer US Dollar (USD) is supported by reduced expectations for more aggressive rate cuts by the Federal Reserve (Fed), with the release of the Federal Open Market Committee (FOMC) Minutes set to take the spotlight later today.
A stronger-than-anticipated jobs report released last Friday has boosted the Greenback, leading markets to reassess the scale of upcoming interest rate reductions. Boston Fed President Susan Collins indicated that a further rate cut by the Fed is likely as inflation trends weaken. In contrast, Atlanta Fed President Raphael Bostic noted that the jobs market remains resilient, and while progress on inflation has been made, overall price levels have yet to reach target goals.
As the week progresses, traders are focusing on the US Consumer Price Index (CPI) inflation report due Thursday, which may provide insights into the future direction of Fed easing. The headline CPI is expected to rise by 2.3% year-on-year in September, while the core CPI is projected to increase by 3.2% for the same period. Any signs of easing inflation could put downward pressure on the USD and limit the upside potential for USD/CHF.
Additionally, a senior leader from Hezbollah stated on Tuesday that the group supports efforts for a ceasefire in Lebanon, marking the first time it has officially accepted a truce without conditions related to the ongoing conflict in Gaza, according to CNN. While a potential ceasefire between Hezbollah and Israel may ease fears of an expanded conflict in the Middle East, rising geopolitical tensions could still drive safe-haven flows towards the Swiss Franc (CHF).
