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USD/CHF Falls as Swiss Franc Gains Strength

The USD/CHF currency pair is extending its decline on Monday, marking the third consecutive day of losses. This comes despite a rebound in the US Dollar due to a data-heavy week ahead in the US.

Market Drivers:

  • US Data-Packed Week: This week’s US economic calendar features key releases like ISM Manufacturing/Services PMI, ADP employment data, Nonfarm Payrolls, and JOLTS job openings. These will influence expectations for potential Fed rate cuts.
  • Current Fed Rate Cut Expectations: Financial markets currently anticipate the Fed’s first rate cut in September at the earliest.
  • US ISM Manufacturing PMI Focus: Today’s focus is on the US ISM Manufacturing PMI, estimated to rise to 49.8 (a contractionary reading if below 50). Investors will also monitor sub-components like New Orders and Prices Paid (inflation indicators).
  • Swiss Franc Strengthens Ahead of CPI: The Swiss Franc is gaining strength ahead of Tuesday’s Swiss Consumer Price Index (CPI) release for May. This data will be crucial for the Swiss National Bank (SNB) in determining the need for a potential rate cut.
  • Expected Increase in Swiss CPI: The May CPI is expected to show a faster monthly growth rate of 0.4% compared to the previous 0.3%.

The USD/CHF is weakening due to the combined factors of a data-heavy week for the US Dollar, keeping its direction uncertain, and the Swiss Franc’s pre-CPI data strength. A stronger-than-expected CPI reading from Switzerland could further boost the Franc if it suggests no immediate need for an SNB rate cut.