USD/CHF: Dollar drifts lower as SNB rate cut bets build and FOMC looms
USD/CHF is under pressure on Tuesday, with the pair slipping lower amid continued softness in the broader US Dollar. The pair is trading in the lower band of its recent range as global markets weigh the implications of Monday’s extraordinary Taiwan Dollar move and its potential contagion across Asian currencies. Though the TWD pared some gains following central bank intervention, concerns about broader FX shifts continue to drive cautious positioning.
The US Dollar Index (DXY) is trading near 99.74, heading into the second straight day of losses. Markets are awaiting the outcome of the Federal Reserve’s two-day policy meeting, which began today. No changes to rates are expected, and no updated forecasts will be released until the June 17–18 meeting. However, the tone from Fed Chair Jerome Powell will be closely scrutinized as markets look for guidance on the timing and magnitude of potential rate cuts. Recent data—particularly April’s ISM Services PMI at 51.6 and solid Nonfarm Payrolls at 177,000—suggest that the Fed can afford to wait, although the Q2 GDP outlook remains mixed, with models showing growth between 1.1% and 2.3%.
In Switzerland, the franc continues to attract safe-haven demand, but its strong performance and a flat inflation print in April are complicating the Swiss National Bank’s stance. Swiss CPI came in unchanged year-over-year, with core inflation falling to 0.6% from 0.9%. This has fueled speculation that the SNB may deliver a further rate cut at its June 19 meeting, potentially pushing policy back into negative territory. Market-implied rates now reflect around 40 basis points of easing over the next quarter. The SNB remains concerned about deflation risks and has kept FX intervention on the table as a policy option.
Source: Fxstreet
