USD/CHF posts modest gains above 0.9080 on the Fed’s hawkish remarks, firmer US Dollar

• USD/CHF trades with a mild positive bias around 0.9085 on Wednesday. 
• The Fed’s Kashkari comments have dampened hopes for potential interest rate cuts this year, lifting the Greenback. 
• The uncertainties surrounding ceasefire talks between Israel and Hamas might boost the CHF and cap the pair’s upside. 

The USD/CHF pair posts modest gains near 0.9085 during the early European trading hours on Wednesday. The recovery of the US Dollar (USD) is bolstered by hawkish remarks from Federal Reserve (Fed) officials, which dampen hopes for potential interest rate cuts in 2024. Market participants will keep an eye on the speeches from the Fed’s Philip Jefferson, Susan Collins, and Lisa Cook later on Wednesday. 

Minneapolis Federal Reserve President Neel Kashkari delivered some hawkish comments on Tuesday, which lifted the Greenback broadly. Kashkari noted that it is too early to declare that inflation has stalled out, and the Fed might cut interest rates this year if price pressures continue to ease. 

Traders lower their bets on Fed rate cuts this year, with a 65.7% chance of a rate cut of at least 25 basis points (bps) in September, according to CME’s FedWatch Tool. Investors will take more cues from the first reading of the US University of Michigan Consumer Sentiment Index on Friday, which is projected to ease to 76.0 in May from the previous reading of 77.2.

On the Swiss front, ceasefire talks between Israel and Hamas remain uncertain. Israel’s war cabinet agreed to continue the military attack against Hamas, with Israeli forces striking Gaza’s southernmost city. Even though Hamas agreed to a cease-fire plan on Monday, Israel said the agreement did not meet its conditions, according to the New York Times. The rising geopolitical tensions in the Middle East might boost safe-haven flows and benefit the Swiss Franc (CHF) against the USD.