USD/CHF falls for the third session near 0.8830, FOMC minutes awaited

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  • USD/CHF moves on a downward trajectory on improved risk appetite.
  • Downbeat US CPI for October leads investors to view rate cuts in 2024.
  • Swiss Franc receives strength on the possibility of more interest rate hikes by SNB.

USD/CHF pair faces challenges for the third consecutive day, possibly influenced by improved risk appetite and indications of a cooling labor market, as investors anticipate a dovish stance from the Federal Reserve (Fed). During the Asian session on Tuesday, the pair trades around 0.8830.

The softer Consumer Price Index (CPI) in the United States (US) for October has prompted investors to reconsider the possibility of a rate hike by the Fed at the December meeting and contemplate potential rate cuts in 2024. According to the latest report from the US Bureau of Labor Statistics, the US CPI decelerated to 3.2% (YoY), below the consensus of 3.3% and down from the previous reading of 3.7%. The Core CPI eased to 4.0% (YoY), slightly below the previous figure of 4.1%, which was expected to remain unchanged.

Swiss National Bank (SNB) Chairman Thomas Jordan’s hawkish comments, where he does not rule out the possibility of more interest rate hikes in the future, continue to support and underpin the strength of the Swiss Franc (CHF). Furthermore, Swiss Industrial Production (YoY) for the third quarter exceeded expectations, coming in at 2.0%, a significant improvement from the previous quarter’s -0.7% (Revised from -0.8%), reported by Swiss Statistics. This positive trend is considered inflationary and may have contributed to undermining the USD/CHF pair.

On Tuesday, Swiss Import and Export data are set to be released, adding to market developments. Traders will shift their focus on pivotal US economic indicators such as Existing Home Sales and the Chicago Fed National Activity Index. Furthermore, FOMC meeting minutes may provide insights into the decision-making process of the Federal Reserve (Fed) committee regarding interest rates.