The USD/CHF pair is currently positioned in negative territory around 0.8045 as the early European session unfolds on Tuesday. The potential for a US interest rate cut in December exerts pressure on the US Dollar relative to the Swiss Franc. Market participants prepare for the upcoming Swiss Consumer Price Index inflation report on Wednesday, alongside the US ADP Employment Change and US ISM Services Purchasing Managers Index data.
The USD/CHF pair is experiencing a decline, currently trading at approximately 0.8045 during the early European session on Tuesday. The recent decline in US Manufacturing PMI data strengthens the argument for a potential rate cut in the United States. The Swiss economy experienced a notable contraction in the third quarter. Weaker-than-anticipated US economic data and dovish remarks from a US Federal Reserve official have heightened expectations for a rate cut this month, resulting in a decline of the Greenback. The current financial markets indicate a nearly 85% probability of a 25 basis point rate cut.
Furthermore, a report indicating that White House economic adviser Kevin Hassett has emerged as the frontrunner for the next Fed chair could potentially impact the Greenback negatively. Hassett is regarded as a strong supporter of US President Donald Trump’s advocacy for more rapid and substantial interest rate cuts to invigorate the economy.
In the third quarter, the Swiss Gross Domestic Product experienced a contraction of 0.5% QoQ, contrasting with a previous expansion of 0.2% (revised from 0.1%), as per reports on Friday. This figure fell short of the anticipated -0.4%. The disappointing Swiss GDP data may weaken the CHF and limit the potential decline for the pair in the short term.