Market Analysis

The USD/CHF currency pair is experiencing selling pressure, trading near 0.8405 during early European hours on Thursday. This movement is driven by dovish statements from US Federal Reserve (Fed) officials, which have undermined the US Dollar (USD).

At the Fed’s annual retreat in Jackson Hole last week, Fed Chair Jerome Powell indicated that "the time has come" for the central bank to consider cutting interest rates. According to the CME FedWatch Tool, markets are fully anticipating a 25 basis points (bps) rate cut in September, with a 36.5% chance of a more substantial reduction.

On Monday, San Francisco Fed President Mary Daly commented that "the direction of change is down, and the time to adjust is now,” reinforcing expectations of a rate cut. Traders are anticipating this move, which is likely to weaken the Greenback in the near term. Minneapolis Fed President Neel Kashkari also supported the discussion of potential rate cuts as early as September due to a softening labor market.

Additionally, rising geopolitical tensions in the Middle East and economic uncertainties are likely to increase demand for safe-haven currencies like the Swiss Franc (CHF) against the USD. Reports indicate that Israel's military conducted extensive raids and airstrikes in the occupied West Bank early Wednesday, resulting in at least 11 Palestinian deaths in what Israel describes as its most significant offensive in years, according to CNN.

In economic data, Switzerland’s ZEW Survey Expectations fell to -3.4% in August from 9.4% previously. The Swiss KOF Leading Indicator for August will be released on Friday. Meanwhile, the US GDP Annualized for Q2 is expected to show a 2.8% expansion in the second estimate, with data due on Thursday.

Paraphrasing text from "FX Street" all rights reserved by the original author.