USD/CHF Falls to 0.9000 on Upbeat Sentiment, Eyes US Inflation

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The USD/CHF pair plunged to 0.9010 early Tuesday as positive market sentiment offsets diminished expectations for a June Federal Reserve (Fed) rate cut. Despite recent strong US Nonfarm Payrolls (NFP) data supporting an inflationary outlook, risk-on sentiment prevails.

Market Sentiment, Treasury Yields Impact USD

The S&P 500’s positive opening reflects increased risk appetite. 10-year US Treasury yields retreat to 4.37%, weighed down by concerns about the potential risks of prolonged higher interest rates on employment and inflation. The US Dollar Index (DXY) dropped to 103.90 amid the upbeat market mood.

Focus Shifts to US CPI Data

All eyes turn to Wednesday’s release of US Consumer Price Index (CPI) data for March. Analysts anticipate a moderation in both monthly headline and core inflation to 0.3% from February’s 0.4%. However, annual headline CPI is expected to accelerate to 3.4% from 3.2%, while core CPI is forecast to decelerate slightly to 3.7% from 3.8%. This inflation data will significantly influence market expectations for Fed rate cuts.

Swiss Franc Outlook: SNB Rate Cuts Expected

Investors anticipate further interest rate cuts by the Swiss National Bank (SNB) as inflation remains persistently below the 2% target. The SNB’s March decision to lower borrowing costs by 25 basis points to 1.5% underscores its dovish outlook.


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